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Warm up Get a textbook

Warm up Get a textbook. Look for the answer in Friday’s Notes What is a draft? What is a note?. Agenda. Warm up Discuss Notes—Negotiable Instruments Review Textbook Chapter 23 Reviewing what you learned—510 Critical Thinking -510 Reviewing what you learned -515 Critical Thinking-515

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Warm up Get a textbook

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  1. Warm upGet a textbook • Look for the answer in Friday’s Notes • What is a draft? • What is a note?

  2. Agenda • Warm up • Discuss Notes—Negotiable Instruments • Review Textbook Chapter 23 • Reviewing what you learned—510 • Critical Thinking -510 • Reviewing what you learned -515 • Critical Thinking-515 • Handout—Checking Account and EFT’s • Word Puzzle Negotiable Instruments

  3. Negotiable Instruments Unit B Business Law Objective 6.01

  4. Drafts Draft - An order by one person to another person to pay money to the order of a third person • Three parties to a draft: A. Drawer – Orders the money to be paid B. Drawee – One ordered to pay the money C. Payee – One who is to receive the money • Acceptor - A drawee who has written “accepted” on the document and signed his/her name

  5. Types of Drafts: • Sight Draft – A draft payable as soon as it is presented to drawee for payment • Time Draft – Not payable until the lapse of a particular time period stated on a draft • Trade Acceptance – Used by a seller of goods to receive payment or to extend credit • Check – Draft drawn on a bank and payable on demand, can be called a demand draft • Honor – Pay when due • Dishonor – Refuse to pay when due • Stop Payment – Instruction for bank not to pay check

  6. Types of Checks • Certified Check – A personal check that has been accepted by a bank before payment • Cashier’s Check – A check the bank draws on itself • Money Order – Draft issued by a post office, bank, express company, or telegraph company for use in paying or transferring funds for the purchaser • Traveler’s Checks – Draft drawn by a well-known financial institution on itself or its agent, used when traveling • Teller’s Check – Draft drawn by a bank on funds that it has on deposit at another bank

  7. Notes • A written promise by one person to pay money to another person • An advantage of using a note is that it can be transferred without much difficulty to other people • Evidence of a debt

  8. Types of Notes: • Demand Note – Payable whenever the payee demands payment • Time Note – Payable at a future date that is written on the face of the note • Installment Note – Paid in a series of payments

  9. Parties to a Draft Drawers Address Check Number ABA # Payee Check Date Charles Paige 319 619 Main Street Raleigh, NC 27601 2-131/1034 _________July 16_____2006 Pay To the Order of _____Donnie Tatum_________________________$100.50 _One hundred and 50/100 -------------------------------------DOLLARS State Credit Union For _______________ _Charles Paige______ Bank Name Drawer’s Signature

  10. Parties to a Note Face Value\ Principal Time\Term $ 700.00Raleigh, NCMay 23, 2006 Three months AFTER DATE ______I_____ PROMISE TO PAY TO THE ORDER OF ___________Charles Paige_________________ Two thousand five hundred and no/100 - - - - - - - - - - - - -DOLLARS PAYABLE AT ___________his firm___________________________ VALUE RECEIVED WITH INTEREST AT ___10%___ PER ANNUM No. 319Due March 19, 2007 Claudette Love Face Value\ Principal Due Date Payee Maker Interest Rate

  11. Certificate of Deposit A written acknowledgment of the receipt of money and its promise to pay back the money, usually with interest on the due date. Has a higher interest rate than most savings accounts.

  12. Negotiability Requirements • Must abide by UCC regulations • Must be in writing • Maker (party agreeing to pay money to another person) or drawer (party that orders the drawee to pay money to the payee) has to sign • There must be a definite amount money and time of payment known • Must have words such as “to the order of” or “to bearer”.

  13. Rules Regulating Checking Accounts • Stale Check • Check that is more than 6 months old • Bank may refuse without liability • Avoiding Negligence • Drawer is responsible if negligent in writing check • Write figures close to $ sign and draw line through spaces not used • Write close to “Pay to Order of” and draw line through spaces not used • Figures and written amount should agree • Sign name last • Write “Void” on check if mistake is made and in check register

  14. Bad Checks • Check issued against checking account with insufficient funds to cover it • States have statutes making it a larceny • Failure of drawer to make check good within certain period of time will serve as a presumption of guilt

  15. Forged Check • Check signed by someone other than drawer and without authority • If bank pays and drawer not negligent, bank bears loss • Drawer has 1 year to discover and report to bank unauthorized signature or alteration on face of check • Drawer has 3 years to discover and report to bank any unauthorized endorsement on check

  16. Stop Payment • Bank has no right to cash check • Bank liable if check is cashed • Oral stop payment good for 14 days • Written stop payment effective for 6 months • Holder in due course • Upon death, bank can cash checks for 10 days for those written prior to death

  17. Balancing Checkbook • Should be done as soon as possible after receiving statement • Balance after writing checks • Subtract checks written from balance • Add deposits to balance • Outstanding Check • Has not cleared the bank • Must be known in order to reconcile statement • Find by comparing the bank statement with the checkbook register

  18. Reconciling a Checkbook • Makes sure the bank’s records agree with your records • Check for outstanding checks and deposits • Check the checks, deposits, ATM activity on the bank statement to make sure that your records are correct • Make adjustments to the bank statement and your records to ensure that you and the bank have the same amount of money • Reconcile every statement when received

  19. Competitive Banking Act Funds from the following must be available on day after deposit • Checks drawn on US Treasury, State, or Local Government • Bank Drafts • Cashier’s Check • Postal Money Order Funds from these must be available within 3 business days following deposit • Checks drawn on banks within same district Funds from checks drawn on banks in different districts must be available within 7 days

  20. Electronic Funds Transfer EFT – Banking method in which computers and electronic technology are used as a substitute for checks and other paper forms of banking Electronic Funds Transfer Act Provides • Automated Teller Machines (ATM’S) • Pay-By-Phone Systems • Direct Deposit or Withdrawals • Point-of-Sale Transfers • Automatic Deposits and Payments

  21. Federal Laws Regulating EFT • No right to stop payment • Must receive a receipt each time you use ATM • Periodic statement must be issued • 60 days from date a problem or error appears to notify bank • Banks have 10 days to investigate • Disputed funds, if returned, must be deposited to your account within 45 days • Must notify bank it card is lost or stolen • Will lose no more than $50 if reported in 2 days • If more than 2 days notification, you can lose $500 or more

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