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Chapter 22 Objectives

To accompany Law for Business, 14e, by Ashcroft and Ashcroft. 2002 West Educational Publishing. Chapter 22 Objectives. State the accountability of the maker and distinguish among the different types of notes. Identify the two different kinds of drafts.

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Chapter 22 Objectives

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  1. To accompany Law for Business, 14e, by Ashcroft and Ashcroft • 2002 West Educational Publishing Chapter 22 Objectives • State the accountability of the maker and distinguish among the different types of notes. • Identify the two different kinds of drafts. • Explain how drafts are accepted and what admissions are made by acceptance. • Describe the characteristics of a check.

  2. Quick Quiz Quick Quiz Quick Quiz Quick Quiz Promissory Notes • Who are the two original parties to a promissory note? • The maker and the payee • What are three liabilities of the maker? • The maker: • Expressly agrees to pay according to terms. • Admits the existence of the payee. • Warrants that payee is competent to transfer the instrument by indorsement.

  3. 1998 The Learning Company Types of Notes • Bonds • Coupon • Registered Collateral notes Real estate mortgage notes Debentures and certificates of deposit

  4. Example of Note PROMISSORY NOTE (can be time note, demand note, collateral note, or mortgage note) March 20, 20xx I, Maker, promise to pay Payee the sum of $3000 due and payable in 30 days at the rate of 8% per annum. Interest and principal are to be payable in legal U.S. tender. ________________ Signature of Maker

  5. Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Drafts • Name and give examples of two types of drafts. • Why is a trade acceptance considered a draft? • Where should an instrument be presented for payment?

  6. Checks Certified checks Bank drafts Cashier’s checks Voucher checks Traveler’s checks

  7. No. 533 20 Pay to the order of: Dollars For Example of Check Drawer 5409 Billionbux Avenue Pittsburg, PA Payee Drawee National Bank Dallas, TX Drawer

  8. Duties of the Bank • Must maintain secrecy regarding information about customers. • Must compare the signature on depositors’ checks with that of the signature card. • Must pay on demand a depositor’s check to the extent of depositor’s funds on account. • Must stop the payment of checks upon request of the drawer.

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