chapter2 negotiable instruments

1、Chapter 2Negotiable instruments(票据）票据）Definition Types Parties involvedCharacteristics ActsContentsDefinition of negotiable instrumentsnA negotiable instrument is an instrument the right on which can be transferred easily from one person to another. It refers to any commercial title of ownership and

2、 may take the forms of valuable securities and evidence. It is a written document that contains an unconditional promise by the drawer to pay the payee or an unconditional order by the drawer to the drawee to pay the payee a fixed amount of money at a definite time. Types of negotiable instrumentspr

3、omissory note （本票）bills of exchange（汇票） check（支票） The main characteristic of negotiable instrumentsnunder negotiation, the transferee, as long as being a holder in due course（正当持票人），has a perfect and legal title to the instrument, no matter whether the transferor has legal title to it or not .Negoti

4、ability（流通性） to be a holder (payee、endorsee、bearer) to take the instrument for value （付对价） without notice that it had been previously dishonored , if such was the case . without notice of any defect in the title of the transferor to get the instrument in good faith（善意） to get the instrument before i

5、ts maturity the instrument is complete and regular on its face. Conditions for being a nUnconditional promise or order to paynRequisite in form a negotiable instrument must be in the form of a document containing required items. different countries have different laws on it and hence different requi

6、rements for the form of it.nNon-causative nature a negotiable instrument exists independent of the commercial relations from which it originated or which occasioned its transfer.nDrawer(maker)-the primary debtor of a credit instrument. Guarantee the payment of the instrument. nDrawee-the addressee o

7、f the credit instrument, not necessarily the debtor (payer)of the instrument.nPayee-the primary creditor of the credit instrument.nAcceptor-comes from drawee. Only appears on a time bill. Becomes the primary debtor instead of the drawer.nEndorser and endorsee-two parties appear as the result of the

8、act endorsement .the former is liable to the latter.nGuarantor-debtor of the credit instrument. His excellent credit can make the instrument more acceptable.nHolder in due course Parties to a negotiable instrumentTwo legal systems relating to negotiable instruments Britain and U.S.A. legal system th

9、e UK Bills of Exchange Act of 1882 Continental legal system the Geneva Uniform law Geneva Convention onthe Unification of the Law Relating to Bills of Exchangeand Promissory Notes in 1930 Geneva Convention onthe Unification of the Law Relating to Checks in 1931 the Negotiable Instrument Law of the P

10、eople Republic of China Bill of exchange（汇票）nDefinition an unconditional order in writing , addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money, to or to t

11、he order of a specified person, or to bearer. (the UK Bills of Exchange Act of 1882 ) A bill of exchange must include the following contents: the term “bill of exchange” expressed in the language in drawing up the instrument An unconditional order to pay a determinate sum of money The name of the pe

12、rson to whom or to whose order payment is to be made A statement of the date and of the place where the bill is issued The maturity date of the bill The place of payment is to be made Signature of drawer(Geneva Convention on the Unification of the Law Relating to Bills of Exchange and Promissory Not

13、es in 1930) 汇票是出票人签发的委托付款人在见票时或者在指定日期无条件支付确定的金额给收款人或者持票人的票据。 （中华人民共和国票据法） EssentialsNon-essentialsAbsolute essentialsRelative essentialsNo.1234for US$100,000Shanghai, 3rd June ,2006 At sightpay toA Co. or orderthe sum of U S dollars one hundred thousand onlyDrawn under S/C No.4567 covering goods shi

14、pped from shanghai to New YorkTo B Co. New York USAFor A Co. shanghai branch(Authorized Signature)Payable by Citi Bank N.Y.USAExchangeContentsPlease draw a draft according to the following materials: Native Product Imp.and Exp. Corporation Jiangsu branch sold some goods valued GBP54,000.00 to Polar

15、Furs LID,London. For settlement ,the exporter drew a draft on the importer on Feb 20, 2006, asking the latter to pay 100% of the proceeds to the order of exporter 30 days after the date of issue. According to the instruction of the importer, the draft will be paid actually at Barclays Bank, PLC, Lon

16、don.Please analyze the contents of the following bill of exchange Exchange for US$10,000.00 New York ,10th Aug, 2006 At 60 days after date pay to Brown & Thomas Inc. or order the sum of U.S.dollars ten thousand onlyTo : Irving Trust company London For George Anderson Inc. New York signature the

17、bill for _( _in words) is drawn by _ on_ payable at _ to _ dated _ . Translation: Acts of bill of exchange（票据行为）（票据行为）issuancepresentmentendorsementacceptancepaymentdishonornotice of dishonorprotestrecourseguaranteepayment issue（出票）-performed by drawer to draw and sign a bill , then to deliver it to

18、 the payee. endorsement （背书）-performed by holder to sign on the back of a bill. presentment（提示）-performed by holder to present a bill to drawee for acceptance or for payment. acceptance（承兑）-performed by drawee before maturity to accept the order given to him by signing his name on the bill , then to

19、 deliver it back to holder for presentment again for payment on maturity.Acts of bill of exchange（票据行为）（票据行为） payment (payment in due course)（正当付款）-performed by drawee or acceptor to pay to the holder in good faith on or after maturity date. dishonor（拒付）-performed by drawee or acceptor to refuse to

20、pay or refuse to accept the bill presented. protest（做拒绝证书）-performed by holder to ask an authorized party (Notary Public 法定公证人) to draw and sign a statement as a legal proof of the fact of dishonor. notice of dishonor（拒付通知）-performed by holder to notify the fact of dishonor to his prior debtors agai

21、nst whom he will exert the right of recourse. recourse（追索）-performed by the holder to exert the right of recourse against his prior debtors to claim back the payment. acceptance for honor & payment for honor（参加承兑与参加付款） -performed by a person normally designated as referee in case of need (预备付款人）

22、to accept (make payment of ) a bill dishonored by non-acceptance (non-payment) for the honor of any party against whom the holder will exert the right of recourse . guarantee（保证）-performed by a person (guarantor保证人) other than the original debtors of the bill to sign on a bill promising to assume th

23、e same liability as that of the guaranteed（被保证人）.Please make endorsement, acceptance, guarantee according to the following materials, and calculate the due date. Exchange for US$10,000.00 New York ,10th Aug, 2006 At 60 days after sight pay to Brown & Thomas Inc. N.Y.or order the sum of U.S.dolla

24、rs ten thousand only To : Irving Trust company London For George Anderson Inc. New York authorized signature The above bill is transferred to Citibank N.Y. for collection. It is then accepted on 20th Aug, 2006, and guaranteed by Barclays bank , PLC, London on the same date. A bill drawn by A Co. on

25、B Co. payable to C Co. and transferred to D bank for collection is accepted on Feb. 26, 2006 and guaranteed by E bank on the same day. Please make respectively the endorsement , acceptance and guarantee according to the above materials.nBank draft and trade billnBankers acceptance bill and traders a

26、cceptance billnSight bill and time bill (usance bill)nClean bill and documentary billnLocal currency bill and foreign currency billnDirect bill and indirect billnDomestic bill and foreign billClassification of bill of exchange Definition Essential items (sample) Acts of P/N Differences between P/N a

27、nd B/E Promissory note(本票）本票）P/NB/EBasic differencePromise to pay Order to pay Parties thereontwothreeAcceptance Never involvedUsually involved in time billPrimary debtor The makerDrawer or acceptorcopiesOnly oneA set of two Promissory note（本票）（本票） Definition A check is a bill of exchange drawn on a banker payable on demand. drawee: a bank drawer: banks customer tenor: at sight Essential items: (sample)Cheque (check)（支票） Acts of a