Date post: | 18-Feb-2018 |
Category: |
Documents |
Upload: | muhammad-wasif |
View: | 215 times |
Download: | 0 times |
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 1/39
Banking & Finance(new improved Latest edition)
Prof. Waseem Subhani
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 2/39
NegotiableInstruments
Prof. Waseem Subhani [IBA],University of the Punjab
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 3/39
1
It means transfer from one person to
another. The onsi!eration is essentia" for
transferabi"ity.
Negotiable
It means a #ritten !oument by #hih
ri$ht is reate! in favour of some person. .
Instrument
Defining Negotiable Instrument
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 4/39
%Prof. Waseem Subhani [IBA], University of the Punjab
&ree"y Transferab"e
Tit"e &ree of a"" 'efets
(ntit"e! to )eeive *oney
)eovery
Unon!itiona"
Characteristics of Negotiable Instrument
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 5/39
Freely Transferable
The ownership of negotiable instrumentis transferable by delivery if it ispayable to bearer, otherwise ownershippasses from endorsement and delivery.
Title Free of all Defects
The holder in due course of such
instrument is free of all kinds of defectsin the act of the transfer.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 6/39
Entitled to Receive Money
The holder of the negotiable instrument is
entitled to receive money mentioned on it.Recovery
The holder in due course of negotiableinstruments can sue defaulting parties, inhis own name without giving any intimationto the drawers of his becoming holder.
Unconditional
The NI must be unconditional. Theinstrument should not state any otherundertaking or instructions by the personpromising to do any act in addition to thepayment of money.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 7/39
+Prof. Waseem Subhani [IBA], University of the Punjab
So ne$otiab"e instrument are
bi""s of ehan$e, promissory
note, he-ue an! these !oumentsare a""e! ne$otiab"e instruments
just beause the e$otiab"e
Instruments At !efines them soan! further they are/0ont!2
Negotiable Instrument – cont’d
Conclusion
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 8/39
3Prof. Waseem Subhani [IBA], University of the Punjab
free"y transferab"e. o#nership passes on #ith !e"ivery or #ith
en!orsement an! !e"ivery.
ho"!er in !ue ourse is entit"e! to reeive
payment. an! ho"!er in !ue ourse an sue in his
o#n name to a"" onerne! parties.
Conclusion – cont’d
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 9/39
5
romissory Note
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 10/39
4Prof. Waseem Subhani [IBA], University of the Punjab
'efinition/
5A promissory note is an instrument in
#ritin$ 0not bein$ a ban6 note or urreny
note2 ontainin$ an unon!itiona" un!erta6in$,
si$ne! by the ma6er, to pay a ertain sum of
money on"y to or to the or!er of a ertainperson or to the bearer of the instruments.7
Promissory Note
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 11/39
8
0i2 *a6er/ 9'ebtor:
0ii2 Payee/ 9;re!itor:
Parties to a Promissory Note
0i2 the prinipa" amount,
0ii2the interest rate if any,
0iii2 the maturity !ate
Terms of a Promissory Note:
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 12/39
<Prof. Waseem Subhani [IBA], University of the Punjab
In Writin$;"ear Promise'efinite Promise
Si$nature of *a6er;ertain *a6er;ertain Payee;ertain Amount
Promise to Pay *oney0ont!2
Essentials of a Promissory Note
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 13/39
In !riting
The PN must be in proper writing. Averbal agreement or promise to pay anyamount can not be treated as PN.
"lear romise
The note must contain clearly a promiseto pay. The word promise must be used init.
De#nite romise
The promise to pay must be denite andunconditional. In case any condition orterms are attached to the promise then itwill not a valid PN.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 14/39
$ignature of Maker
The maker of note must signs it. If themaker does not sign it then it will not bea valid PN.
"ertain Maker
The must be certain and denite person. There must a clear statement that who isthe maker or payer.
"ertain ayeeike maker the payee must be certainand denite person. PN must clearlystats that who is the promissory or
payee.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 15/39
"ertain %mount
The amount to be paid must be in awritten in a denite way. If there is anelement of estimation than this will notbe a valid PN.
romise to ay Money
In PN there must be a promise to pay
money only. If a person writes a PN inthe following way, !I promise to pay you"s. #$$$ and one car% then this is not avalid PN.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 16/39
=Prof. Waseem Subhani [IBA], University of the Punjab
Miscellaneous:Legal matters that are essential for other legal
documents also apply to the promissory note
such as it shall be:
properly and clearly written, date should be mentioned, amount should be stated in both words and
figures and it should be properly stamped.
Essentials of a Promissory Note – cont’d
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 17/39
1>
'efinition/
“A bill of exchange is a document in writing
containing an unconditional order, signed by themaker, directing a certain person for paying a
certain sum of money only to or to the order of a
certain person, or to the bearer of instrument.
Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 18/39
11
!" Dra#er:
The person who makes the bill is called
rawer of the bill.
$" Dra#ee:The person on whom the bill is drawn is called
the drawee.
%" Payee:
The person to whom payment is made is called payee.
Parties to a Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 19/39
1%
!. "t must be in writing and properly worded.
#. "t contains an order to pay.$. The order to pay must be unconditional.
%. "t must be signed by the drawer.
5. The drawee must be a certain and definite person.
&. The payee must be a certain and definite person.'. The amount payable should be stated clearly.
(. The order is to pay money only. )*ot any other
commodity or any asset+
. "t must fulfil other legal re-uirements such as
mentioning of date, signature, stamp etc.
Essentials of Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 20/39
1+
If the !ra#ee refuses to aept the bi"" then
the bi"" of ehan$e has no va"ue. &or the
purpose of aeptane it is ompu"sory that the
!ra#ee puts his si$nature on the fae of the bi""an! #rite the #or! 5A;;(PT('7.
&cce'tance of Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 21/39
13
?ption of 'isount
;re!it &"eibi"ity
(ase of Business
Promotin$ &orei$n Tra!e
'oumentation
&d(antages of Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 22/39
'tion of Discount
"redit Fle(ibility
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 23/39
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 24/39
1@
Aommo!ation Bi""s
;"ean Bi""
'oumentary Bi""&ititious Bi""
Bi"" in Sets
Ty'es of Bill of Echange
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 25/39
14
When it is !u"y presente! for aeptane an!
suh aeptane as presribe! by the At is
refuse! or annot be obtaine!.
When on presentation, aeptane is euse!an! the bi"" is not aepte!, the ho"!er is entit"e!
to have an un-ua"ifie! aeptane an! if he !oes
not $et suh an aeptane, he may treat the bi""
as !ishonore! by nonaeptane an! animme!iate ri$ht of reourse a$ainst the !ra#er
or en!orsers arues to the ho"!er an! no
presentment for payment is neessary.
Dishonor of Bill of Exchange
Dishonor by Non-Acceptance:
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 26/39
18
otin$/ When a bi"" is !ishonore! by nonaeptane
or by nonpayment, it is sometimes neessary to
obtain forma" proof that it has been !u"y
presente! an! !ishonore!. The first step to this
en! is 6no#n as notin$ the bi"" an! the seon!
step is 6no#n as protestin$ it.
Dishonor by Non-Acceptance – cont’d
The notary pub"i notes the/
0a2 'ate of !ishonour
0b2 )easons for !ishonour, if any, an!
02 ?ther re"evant fats.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 27/39
1<
5A he-ue is a bi"" of ehan$e !ra#n on a
speifie! ban6er an! not epresse! to be payab"e
other#ise then on !eman!.7
Che)ue
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 28/39
1=
!" Dra#er:e is the person #ho !ra#s or #rites the
he-ue.
$" Dra#ee:The ban6 on #hih he-ue is !ra#n is a""e!
!ra#ee.
%" Payee:
The person #ho is entit"e! to reeive paymenton a he-ue is a""e! payee.
Parties to a Che)ue
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 29/39
%>
1. ?pen ;he-ue
%. ;rosse! ;he-ues
+. Bearer ;he-ue
3. ?r!er ;he-ue@. B"an6 ;he-ue
4. Post!ate! ;he-ue
8. *uti"ate! ;he-ue
<. Sta"e ;he-ue=. Anti 'ate! ;he-ue
Ty'es of Che)ue
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 30/39
%1
*eneral Crossing "n general crossing two parallel transerse lines are
drawn on che-ue and
!. These may be left blank or
#. The words “/ 0o.1 , “*ot negotiable1 or
any abbreiation can be written in between
these lines.
Crossing of the Che)ue
Ty'es of Crossing
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 31/39
%%
+'ecial Crossing:
*eanin$s/
Un!er speia" rossin$ the name of a partiu"ar
ban6 is mentione! on the he-ue either #ith or#ithout the #or!s 5ot e$otiab"e7.
+'ecial Crossing
(ffets/
In ase of speia" rossin$ the payin$ ban6 sha""
ma6e payment on"y to the ban6 #hose name is
#ritten on he-ue.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 32/39
%+
5The #ritin$ of a persons name either on the
ba6 or on the fae of instrument fo""o#e! by ones
si$nature for the purpose of ne$otiation is a""e!
en!orsement7.
Endorsement
Endorser:The person #ho ma!e the en!orsement, by
#ritin$ an! si$nin$, is a""e! en!orser.
Endorsee:
The person to #hom en!orsement is ma!e is
a""e! en!orsee.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 33/39
%3
,a- Blan. or *eneral Endorsement:
The b"an6 or $enera" en!orsement is the type of
en!orsement in #hih the ho"!er on"y puts his
si$nature an! !e"iver it to the en!orsee.
/ind of Endorsement
,b- 0ull Endorsement:
The he-ue ontains not on"y the si$nature of
the ho"!er C en!orser but a"so speifies theen!orsee. &or eamp"e
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 34/39
%@
,c- Conditional Endorsement:
;ontains an or!er to pay on"y #hen a "ai! !o#n
on!ition by the en!orser is fu"fi""e!.
/ind of Endorsement – cont’d
,d- +ans 1ecourse Endorsement:
In this type of en!orsement, the en!orser refusesto aept any "iabi"ity on the instrument to any
subse-uent party in ase of !ishonor.
,e- 0acultati(e Endorsement:In suh en!orsement the en!orser refers to the
#aiver of some ri$ht at the time of en!orsement.
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 35/39
It must be on the ba6 or fae of the instrument
or on etra s"ip of paper a""e! 5a""on$e7annee! thereto.
It must be ma!e by the ma6er or ho"!er of a
ne$otiab"e instrument payab"e to or!er.
It must be si$ne! by the payee or the en!orsee. It must be ma!e #ith the intention of
transferrin$ the instrument to a thir! person so
as to entit"e the transferee the ri$ht to reover the
money !ue un!er it. It must be omp"ete! by !e"ivery of the
instrument #ith the intention of passin$ the
property in the instrument.
Essentials of a (alid Endorsement
%4
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 36/39
A ban6 !raft is an or!er $iven by one branh of
the ban6 to another branh of the same ban6 to
pay a sum of money to a ertain person name!
therein, on !eman!.
Ban. Draft
%8
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 37/39
1. o stamp is nee!e!.
%. It has uni-ue seria" number.
+. It is stampe! by a responsib"e ban6 offier on
beha"f of the ban6.3. It is payab"e on !eman!.
@. The amount payab"e an! the person to #hom it is
payab"e, both are speifie! "ear"y in !raft.
4. It is an unon!itiona" or!er for payment.
0eatures of Ban. Draft
%<
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 38/39
7/23/2019 13th Week-Negotiable Instruments [Repaired]
http://slidepdf.com/reader/full/13th-week-negotiable-instruments-repaired 39/39
than6 U
Best
of
Du6