1 / 11

Chapter 22 Negotiable Instruments: Negotiability and Transferability

Chapter 22 Negotiable Instruments: Negotiability and Transferability. Learning Objectives. What are the four types of negotiable instruments which Article 3 is concerned? Which of these instruments are orders to pay and which are promises to pay?

wilesj
Télécharger la présentation

Chapter 22 Negotiable Instruments: Negotiability and Transferability

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Chapter 22Negotiable Instruments:Negotiability and Transferability

  2. Learning Objectives • What are the four types of negotiable instruments which Article 3 is concerned? Which of these instruments are orders to pay and which are promises to pay? • What are the requirements for an instrument to be negotiable? • Who whom is a bearer instrument payable? • What is a restrictive endorsement?

  3. Article 3 • A negotiable instrument is a signed writing that contains an unconditional promise or order to pay an exact sum of money on demand or at a specified time to a specific person or bearer. • Can function as a substitute for money or an extension of credit.

  4. Types of Instruments • Drafts and Checks (Orders to Pay) • Draft—unconditional written order that involves three parties. • Drawer (creates the draft) who • Orders the party holding the money (the Drawee) to pay money • To a Third Party (the Payee) • Time Draft • Sight Draft

  5. Types of Instruments • Promissory Notes and C.D.’s (promises to pay) • Promissory Note—written promise to pay money by Maker to Payee. • C.D.—type of note. Created when party deposits money with bank who promises to pay, with interest, on a certain date.

  6. Requirements for Negotiability • Must meet the following criteria: • Be in Writing • Be signed by the Maker or Drawer • Be unconditional promise or order to pay • State a fixed amount of money. • Be payable on demand or definite time • Be payable to order or bearer, unless a check.

  7. Factors That Do Not Effect Negotiability • Undated or Ambiguous Terms • Postdating • Handwriting outweighs printed terms • Words outweigh numbers • Interest rate

  8. Transfer of Instruments • By Assignment • Transferee is an Assignee • By Negotiation • Transfer in which the transferee becomes a holder • Negotiating Order Instruments • Negotiating Bearer Instruments

  9. Indorsements • Signature with or without additional words or statements. • Required when order instruments are being negotiated. • Indorser: person who transfers by signing and delivering to another person. • Indorsee: person to whom check is indorsed and delivered.

  10. Indorsements • Blank Indorsement • No particular indorsee and can consist of a mere signature. • Special Indorsement • Indicates specific person (indorsee) to whom the indorser intends to make the instrument payable. • Qualified Indorsement • Indorsement that disclaims any liability to indorsee (“without recourse”). Usually done by an agent.

  11. Restrictive Indorsements • Requires indorsee to comply with certain instructions regarding funds involved. • Conditional Indorsements (based on a future event) • Indorsement for Deposit Only • Trust Indorsements

More Related