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Business Law

Objectives. Identify the basic types of negotiable instrumentsList the requirements of a negotiable instrumentState what may constitute a signature. Objectives. Decide whether a variable-interest-rate note is negotiableDescribe the process of negotiation. Negotiable Instrument. Any written promis

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Business Law

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    1. Business Law Chapter 23 The Essentials of Negotiability

    2. Objectives Identify the basic types of negotiable instruments List the requirements of a negotiable instrument State what may constitute a signature

    3. Objectives Decide whether a variable-interest-rate note is negotiable Describe the process of negotiation

    4. Negotiable Instrument Any written promise or order to pay a sum of money Drafts Checks Promissory notes

    5. Negotiable Instruments and the UCC Article 3 Negotiable instruments Article 4 Bank deposits and collections

    6. Types of Instruments Drafts and Checks (Orders to Pay) Promissory Notes and CDs( Promises to Pay) Demand instruments Time instruments

    7. Drafts and Checks Orders to pay Drawer – person who initiates a draft Drawee – the person who is ordered to pay Payee – person to whom an instrument is made payable

    8. Drafts and Checks Time draft – payable at a definite future time Sight (demand) draft – payable on acceptance Trade acceptance – drawn by the seller of goods on the purchaser and accepted by the purchaser’s written promise to pay Checks

    9. Promissory Notes and CDs Promissory note – written promise to pay a certain sum in money on a specified date Maker – one who promises to pay Payee – one to whom the promise is made Bearer – a person in possession of an instrument payable to bearer or indorsed in blank

    10. Promissory Notes and CDs Certificates of Deposit (CD) – a bank’s note Small CDs – up to $100,000 Jumbo CDs - $100,000 and over

    11. What is a Negotiable Instrument? Written Form Signatures Unconditional Promise or Order to Pay Promise or Order Unconditionality

    12. What is a Negotiable Instrument? A Fixed Amount of Money Fixed Amount Payable in Money Payable on Demand or at a Definite Time Payable on Demand Payable at a Definite Time

    13. What is a Negotiable Instrument? Payable to Order or to Bearer Order Instruments Bearer Instruments

    14. Transfer Transfer by Assignment Transfer by Negotiation Holder – person who is legally entitled to payment on it Negotiating Order Instruments By delivery with necessary indorsements

    15. Transfer Transfer by Negotiation Negotiating Bearer Instruments No indorsement necessary Converting Order Instruments to Bearer Instruments and Vice Versa

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