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Negotiable Instruments

Negotiable Instruments. Created By: Laura Kinchen. What is a negotiable instrument?. A written order or promise to pay a sum of money, either to a specified party or to the person who holds it. Negotiable means transferable. Negotiable Instrument.

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Negotiable Instruments

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  1. Negotiable Instruments Created By: Laura Kinchen

  2. What is a negotiable instrument? • A written order or promise to pay a sum of money, either to a specified party or to the person who holds it. • Negotiable means transferable

  3. Negotiable Instrument • A check, like money, is a medium of exchange. • The negotiation that goes on refers to the transfer of the instrument from one party to another

  4. Examples of Negotiable Instruments • Checks • Drafts • Bills of exchange • Some types of promissory notes • Winning Lottery Tickets, Certificates of Deposit, Bonds, Treasury bills

  5. Checks • Most common form of negotiable instrument • Offer: • Convenience for writer and recipient • Relatively high degree of safety • Record of transaction

  6. Drafts • Three-party instrument like a check, but there are other forms • An order signed by one party (payer/drawer) that is addressed to another party (drawee) directing the drawee to pay to someone (payee) the amount indicated on the draft

  7. Drafts • Most drafts are used for the purchase of goods and services when the transaction goes beyond the bounds of the U.S. banking law

  8. Bills of Exchange • Negotiable and unconditional written order, such as a check, draft or trade agreement, addressed by one party to another • Common form of internationally negotiable instruments

  9. Promissory Notes • Written promise to pay at a fixed or determinable future time a sum of money to a specified individual

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