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Chapter 3 Instruments
objectives:
? Parties involved
? Acts of instrument
? Instrument laws
? Three main instruments and their comparison
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1 Negotiable Instruments
1.1 Definition,Is a chose in action,(法律上的产权）
the full and legal title to which is transferable by
delivery of the instrument (possibly with the
transferor’s endorsement) with the result that
complete ownership of the instrument and all the
property it represents passes freely from equities
to the transferee,providing the latter takes the
instrument in good faith and for value.
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definition
(广义） 指商业上的权利单据
（ Document of Title),作为某人的，不
在他实际占有下的金钱或商品的所有
权的证据。其权利可以转让。
（狭义）是以支付金钱为目的的证券，
由出票人签名于票据上，无条件地约
定由自己或另一人支付一定金额，可
以流通转让。
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1.2 Functions
As a means of payment
As a means of credit
As means of negotiation
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1.3 Characteristics
Negotiability（ 流通转让性 ）
Non-causative Nature（ 无因性 ）
Requisite in Form（ 要式性 ）
Presentment（ 提示性 ）
Returnability (返还性）
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2 Parties to a negotiable
instrument
Drawer,the person who draws a bill of
exchange or a check upon the drawee for
the payment of a certain amount of money.
Status? Debtor or creditor?
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Answer
Main debtor before acceptance while the
secondary debtor after acceptance, He
will be responsible to Or
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answer2
Holder or any endorsers
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Drawee
lthe person upon whom a bill of
exchange or a check is drawn,He is
also known as the addressee of a draft.
Is the drawee the main debtor?
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answer
No,cause he didn’t sign in the bill,He
doesn’t take the liability that the bill will
must be honoured,
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Payee
the person to whose order the drawee is to
make payment or to whom the money is to
be paid.
What’s his status? Debtor or creditor?
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answer
Creditor and the first holder as well,He has
the right to collect money by presenting
the bill or to transfer it to another party,
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Endorser
lWhen a payee or a holder signs his name
on the back of an instrument for the
purpose of transferring it to another person,
he is called an endorser,He is liable to his
subsequent endorser,his endorsee or any
subsequent holder of the instrument.
Creditor or debtor?
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answer
Debtor cause he is liable to his
subsequent endorser i.e the endorsee,
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Endorsee
l An endorsee is the person to whom an
instrument is endorsed,He is the holder of
an instrument,which has been transferred
by the endorser.
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Holder
l A holder is the possessor of an instrument,
namely the payee,the endorsee or bearer.
He may sue,if needed,on the instrument
in his own name.
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Holder for value
the person who possesses an instrument
for which value has been given by himself
or by some other persons.
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Holder in due course
the person who is in possession of an
instrument that is ① complete and regular
on its face,② taken before maturity without
notice of its previous dishonor,③ taken in
good faith and for value and
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④ taken without notice of any infirmity in the
instrument of defect in the title of the
person negotiating it,He is also called a
bona fide holder,who may claim payment
from all parties liable on the instrument.
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Acceptor
l If and when the drawee agrees and
assents to the order in writing addressed
to him on a bill of exchange by signing his
name on its face,indicating that he will
pay on due date,the drawee will become
an acceptor.
Main debtor
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Guarantor
the person who guarantees the
acceptance and payment of a bill of
exchange,though he is not a party liable
thereto,The obligations of the guarantor
are the same as those of the guranteed
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Acceptor for honor
l the person who himself is not a party
liable on a bill of exchange but with the
consent of the holder may intervene and
accept the bill supra prostest.
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3 Acts of instrument
3.1 To issue,two acts
A.to draw and sign a draft
B.to deliver it to the payee.
Usually after issuance,the drawer becomes
the main debtor of an instrument and the
last one to be claimed against when the
instrument is dishonored.
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3.2 Endorsement
It is an act of negotiation,Prerequisites (先
决条件 ） for a valid endorsement.
l Should be normally effected on the back
of a draft and signed by the endorser;
Must be made for the whole amount of the
draft.
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Four kinds of endorsement
Blank endorsement,shows an endorser’s
signature only and specifies no endorsee,
It is also called a general endorsement.
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Special endorsement
specifies an endorsee to whom or to
whose order the draft is to be paid,in
addition to the signature of an endorser.
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Specimen
Exchange for GBP 500.00 London,10 Nov.
At sight pay to the order of C Co.,the sum of
Pounds five hundred only
To B Bank,For A Company,
London London
Signature
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Special endorsement
Pay to the order of
B Co.,London
For A Co.,London
Signature
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Blank (general)
endorsement
is one that shows an endorser’s signature
only and specifies no endorsee,
For A Co.,London
Signature
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Restrictive endorsement
l it is restrictive when it prohibits further
transfer of the draft.
Eg,Pay to A Bank only
Pay to A Bank for account of B Co.,
Pay to A Bank not negotiable
Pay to A Bank not to order
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Conditional endorsement
a special endorsement adding some words
thereto that create a condition bound to be
met before the special endorsee is entitled
to receive payment,The endorser is liable
only if the condition is fulfilled.
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example
Pay to the order of B Co,
On delivery of B/L No,123
For A Co.,London
Signature
开出的汇票必须是无条件的支付命令,作成背书
却是可以带有条件的,附带条件仅对背书人和被
背书人有约束作用，与付款人、出票人无关。
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3.3 Presentment
A draft must be duly presented for payment
if it is a sight bill or duly presented for
acceptance first and then presented for
payment at maturity if it is a time bill.
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3.4 Acceptance
is a signification by the drawee of his
assent to the order given by the drawer,
He engages,by signing his name across
the face of the bill that he will pay when it
falls due.
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So presentment for acceptance is legally
necessary to fix the maturity date of a draft
payable after sight,Valid acceptance
requires,
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2 conditions
① the word,accepted” must be written on
the bill to be followed by the signature of
the acceptor and the date of acceptance,
A mere signature of the acceptor without
additional words is also justified,
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② It ought not be expressed that the
drawee will carry out his promise by any
other means than the payment of money.
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Types of acceptance
lGeneral acceptance
without any restrictions while confirming
acceptance
lQualified acceptance
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Conditional acceptance
ACCEPTED
1 June,2004
Payable on delivery of
Bills of Lading
For ABC Bank Ltd.,London
Signature
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Partial Acceptance
for example,supposing the amount is GBP
1000.00
ACCEPTED
3 June,2004
Payable for amount of
GBP 800.00 only
For ABC Bank Ltd.,London
Signature
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Local Acceptance
ACCEPTED
5 June,2004
Payable at The Hambros
Bank and there only
For ABC Bank Ltd.,London
Signature
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Qualified Acceptance as to time
( supposing the tenor is 3 months after date
(of issue)
ACCEPTED
5 June,2004
Payable at 6 months after date
For ABC Bank Ltd,,London
Signature
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3.5 Payment
Act of payment is performed when a draft is
paid,A bill is discharged by payment in
due course only when such payment is
made by or on behalf of the drawee or the
acceptor
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3.6 Dishonor
Act of dishonor is a failure or refusal to
make acceptance on or payment of a draft
when presented
l Dishonour by non-acceptance
l Dishonour by non-payment
Payment is impossible because of the
payer’s bankruptcy,death or his evading.
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3.7 Notice of dishonor
A notice on which default(不履约 /违约）） of
acceptance or of payment by the drawee or the
acceptor is advised,to be given by holder of a
draft to the drawer and all the endorsers whom
he seeks to hold liable for payment,A notice of
dishonor must be given by or on behalf of the
holder or an endorsee on the next working day
after the dishonor of the draft.
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3.8 Protest
A written statement under seal drawn up and
signed by a notary public or other authorized
person for the purpose of giving evidence that a
draft has been presented by him for acceptance
or for payment but dishonored.
If there is no notary public in the place of
dishonour,the protest can be made by a local
Famous Man before two Witnesses,The
charges involved is borne by the holder.
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3.9 Right of recourse
In the event of a draft being dishonored,the
holder has a right of recourse against the
other parties thereto,that is,a right to
claim compensation from the drawer or
any endorser.
Recourse:The right to claim a refund from
another party,
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Three conditions
l （ 1） Present within a legal time limit
l （ 2） Notice within specified time (the following
day after dishonour as per Bills of Exchange Act
1882)
l （ 3） Dishonour must be within specified time
(within one working day after dishonour and
make the protest by a notary public as per Bills
of Exchange Act 1882)
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Time limit
Bills of Exchange Act,6 years to retain
the right of recourse
Geneva conventions of 1930,1 year for
a holder to his pre-endorser,6 months
for an endorser to his pre-endorser.
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3.10 Acceptance for honor supra
protest
Acceptance for honor supra protest is an act
performed by the acceptor for honor,who
accepts the bill supra protest,for the honor
of any party liable thereon or for the honor
of the person for whose account the bill is
drawn,A bill may be accepted for honor
for only a part of the sum drawn payable.
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3.11 Payment for honor supra
protest
Payment for honor supra protest is an act
similar to acceptance for honor supra
protest in the sense that it vindicates the
honor of a party liable on a bill.
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3.12 Guarantee
Act of guarantee is performed by a third
party called guarantor,who engages that
the bill will be paid on presentation if it is a
sight bill or accepted on presentation and
paid at maturity if it is a time bill.
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4,Act of bills
4.1 The French Acts
1673,it had the stipulations about
instruments,In 1807,it was edited into its
commercial code and lied as one of its
chapter,
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4.1.2 Characteristics
l Focuses on the effect of clearance only.
The relations between bills and base cannot
be separated,
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Relations
Relations of bills refer to the relations
among drawers,payees,payers,
acceptors,endorsers and so on.
Relations of base refer to relations out of
bills such as:
l Cause relations
l Capital relations
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4.2 The German Acts
It was brought into effect in Apr,16th,
1871 including bills of exchange and
promissory notes only,The act of checks
was established in 1908.
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Characteristics
l Focuses on negotiable and credit effect.
l Non-causative Nature,
l Requisite in Form,
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4.3 Bill of Exchange Act 1882
similar to the German Acts,It focuses on
protecting the benefit of the holder in due
course and doesn’t focus on form,
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4.4 Uniform Law
lUniform Law for Bills of Exchange &
Promissory Notes,1930
Uniform Law for Cheques,1931
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4.5 Difference between the Geneva
Uniform Law and the Common Law
Classifications
Right of holders
“holder in value and in due course” v.s
“lawful holder” (successive endorsement)
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Sequel (后果 ） of forged endorsement
“real holder” v.s,faithful holder”
Requisite in Form
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5 Bill of Exchange (Draft)
5.1 Definition:
is 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 the order of a specified person,or to
bearer.
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5.2 Main Parties involved
lDrawer
lDrawee
Payee
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Specimen
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5.3 Main Items
l The word,Exchange”
l An unconditional order in writing
l Time and place of issue
l Tenor (time of payment)
l Amount in words and figures
l Name and address of the drawee
lDrawer’s signature
l Name of the payee
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EXPRESSIONS OF DECIMAL
As per XXX.60,there are several different
expressions for yr reference,
SAY xxx AND POINT SIXTY ONLY
SAY XXX AND POINT SIX ZERO ONLY
SAY XXX AND CENT SIXTY ONLY
SAY XXX AND 60/100 ONLY
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5.4 Other items
L Numbers and copies of a bill of exchange (A
set of Bill)
l Place of payment (the place besides the payer’s
name is regarded as the place of payment
unless otherwise stipulated)
L Interest and its Rate
Payable in other currency (rate of foreign
exchange should be shown on,Which cannot
conflict with the local law in the place where
payment made)
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5.5 Flow chart
Drawer Payer
A B
Payee or order
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5.5 Types
l Clean bill and documentary bill
l Banker’s draft and commercial (trader’s)
draft
A bill is called a banker’s draft when the
issuer and the payer are both a bank.
A bill is called a commercial draft when the
issuer and the payer are both a trader.
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lBanker’s acceptance bill and commercial
(trader’s) acceptance bill
lSight bill and usance (time) bill
Order bill or bearer bill or straight bill
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5.6 Discounting
Where a payee of a term bill requires
payment immediately,a bank may
discount the bill,i.e,make immediate
payment deducting an amount for interest
over the term of the bill.
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6 Promissory Note
6.1 Definition
A promissory note is an unconditional
promise in writing made by one person to
another signed by the maker,engaging to
pay,on demand or at a fixed or
determinable future time,a sum certain in
money to,or to the order,of a specified
person or bearer.
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Specimen
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6.2 Parties involved
lDrawer
Payee
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6.3 Main Items
l The words,promissory note”
l An unconditional promise to pay
l Name of the payee or his order
lDrawer’s signature
l Place and date of issue
l Tenor
l A certain sum of money in words and figures
Place of payment (It will be regarded as the place
of payment if not shown)
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6.4 Types
Trader’s Notes
It is barely used because of the unknown
standing of the issuer or he is in any way
financially suspect.
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Banker’s notes
They are widely used in banking and
issued by commercial banks payable to
specified person or to bearer.
The issuance of banker’s notes payable to
bearer is prohibited by government while it
is allowed to issue banker’s notes payable
to specified person
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International Money Order
Issued by the banks set up in clearing
centers for travelers.
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Traveler’s Check
The agent that issues the traveler’s checks
is the payer.
In fact,it is a deposit without interest for a
purchasers in his issuing agency,
It is about to draw the deposit when
cashing a check,so it is named check,
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Certificate of Deposit (CD)
(1) US-dollar Negotiable CD
(2) Yankee CD
(3) Euro-dollar Negotiable CD,FIRST
NATIONAL CITY BANK in 1996 for the
first time in London within 1 year
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Central Banker’s Notes
It is also called Bank Note,In China it is
called fund (基金 )
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Various Bonds
Usance promissory notes usually within
one year.
For example,At 91 days after date fixed
amount Local Government Promissory
Note,If this blank is not filled in,the bill will
be paid to bearer.
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Treasury Bills
They are usually large bills in western
countries and the tenor is usually 91 days.
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7 Check (cheque)
7.1 Definition
A check is an unconditional order in writing
addressed by the customer (the drawer) to
a bank (the drawee) signed by that
customer authorizing the bank to pay on
demand a certain sum of money to or to
the order of a designated person or to
bearer (the payee).
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Briefly speaking,a cheque is a bill of
exchange drawn on a bank payable on
demand,
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specimen
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7.2 Parties involved
l Drawer
l Payer
l Payee
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7.3 Main Items
l The word,check”
l An unconditional order in writing
l Name and place of the paying bank
l Drawer’s signature
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l Place and date of issue (the place besides the
issuer’s name is regarded as the place of issue if
the place of issue is not shown)
l The word,at sight” (It will still be regarded as on
demand if not shown)
l A certain sum of money in words and figures
l Name of the payee or his order
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7.4 Types
l Cheque payable to order
l Cheque payable to bearer
l Crossed checks and Open cheque
General crossing
Special crossing
Certified checks
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7.5 Cautions
rubber cheque/ forged cheque
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8,Comparisons
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Chapter 3 Instruments
objectives:
? Parties involved
? Acts of instrument
? Instrument laws
? Three main instruments and their comparison
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1 Negotiable Instruments
1.1 Definition,Is a chose in action,(法律上的产权）
the full and legal title to which is transferable by
delivery of the instrument (possibly with the
transferor’s endorsement) with the result that
complete ownership of the instrument and all the
property it represents passes freely from equities
to the transferee,providing the latter takes the
instrument in good faith and for value.
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definition
(广义） 指商业上的权利单据
（ Document of Title),作为某人的，不
在他实际占有下的金钱或商品的所有
权的证据。其权利可以转让。
（狭义）是以支付金钱为目的的证券，
由出票人签名于票据上，无条件地约
定由自己或另一人支付一定金额，可
以流通转让。
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1.2 Functions
As a means of payment
As a means of credit
As means of negotiation
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1.3 Characteristics
Negotiability（ 流通转让性 ）
Non-causative Nature（ 无因性 ）
Requisite in Form（ 要式性 ）
Presentment（ 提示性 ）
Returnability (返还性）
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2 Parties to a negotiable
instrument
Drawer,the person who draws a bill of
exchange or a check upon the drawee for
the payment of a certain amount of money.
Status? Debtor or creditor?
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Answer
Main debtor before acceptance while the
secondary debtor after acceptance, He
will be responsible to Or
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answer2
Holder or any endorsers
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Drawee
lthe person upon whom a bill of
exchange or a check is drawn,He is
also known as the addressee of a draft.
Is the drawee the main debtor?
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answer
No,cause he didn’t sign in the bill,He
doesn’t take the liability that the bill will
must be honoured,
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Payee
the person to whose order the drawee is to
make payment or to whom the money is to
be paid.
What’s his status? Debtor or creditor?
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answer
Creditor and the first holder as well,He has
the right to collect money by presenting
the bill or to transfer it to another party,
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Endorser
lWhen a payee or a holder signs his name
on the back of an instrument for the
purpose of transferring it to another person,
he is called an endorser,He is liable to his
subsequent endorser,his endorsee or any
subsequent holder of the instrument.
Creditor or debtor?
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answer
Debtor cause he is liable to his
subsequent endorser i.e the endorsee,
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Endorsee
l An endorsee is the person to whom an
instrument is endorsed,He is the holder of
an instrument,which has been transferred
by the endorser.
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Holder
l A holder is the possessor of an instrument,
namely the payee,the endorsee or bearer.
He may sue,if needed,on the instrument
in his own name.
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Holder for value
the person who possesses an instrument
for which value has been given by himself
or by some other persons.
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Holder in due course
the person who is in possession of an
instrument that is ① complete and regular
on its face,② taken before maturity without
notice of its previous dishonor,③ taken in
good faith and for value and
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④ taken without notice of any infirmity in the
instrument of defect in the title of the
person negotiating it,He is also called a
bona fide holder,who may claim payment
from all parties liable on the instrument.
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Acceptor
l If and when the drawee agrees and
assents to the order in writing addressed
to him on a bill of exchange by signing his
name on its face,indicating that he will
pay on due date,the drawee will become
an acceptor.
Main debtor
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Guarantor
the person who guarantees the
acceptance and payment of a bill of
exchange,though he is not a party liable
thereto,The obligations of the guarantor
are the same as those of the guranteed
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Acceptor for honor
l the person who himself is not a party
liable on a bill of exchange but with the
consent of the holder may intervene and
accept the bill supra prostest.
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3 Acts of instrument
3.1 To issue,two acts
A.to draw and sign a draft
B.to deliver it to the payee.
Usually after issuance,the drawer becomes
the main debtor of an instrument and the
last one to be claimed against when the
instrument is dishonored.
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3.2 Endorsement
It is an act of negotiation,Prerequisites (先
决条件 ） for a valid endorsement.
l Should be normally effected on the back
of a draft and signed by the endorser;
Must be made for the whole amount of the
draft.
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Four kinds of endorsement
Blank endorsement,shows an endorser’s
signature only and specifies no endorsee,
It is also called a general endorsement.
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Special endorsement
specifies an endorsee to whom or to
whose order the draft is to be paid,in
addition to the signature of an endorser.
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Specimen
Exchange for GBP 500.00 London,10 Nov.
At sight pay to the order of C Co.,the sum of
Pounds five hundred only
To B Bank,For A Company,
London London
Signature
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Special endorsement
Pay to the order of
B Co.,London
For A Co.,London
Signature
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Blank (general)
endorsement
is one that shows an endorser’s signature
only and specifies no endorsee,
For A Co.,London
Signature
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Restrictive endorsement
l it is restrictive when it prohibits further
transfer of the draft.
Eg,Pay to A Bank only
Pay to A Bank for account of B Co.,
Pay to A Bank not negotiable
Pay to A Bank not to order
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Conditional endorsement
a special endorsement adding some words
thereto that create a condition bound to be
met before the special endorsee is entitled
to receive payment,The endorser is liable
only if the condition is fulfilled.
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example
Pay to the order of B Co,
On delivery of B/L No,123
For A Co.,London
Signature
开出的汇票必须是无条件的支付命令,作成背书
却是可以带有条件的,附带条件仅对背书人和被
背书人有约束作用，与付款人、出票人无关。
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3.3 Presentment
A draft must be duly presented for payment
if it is a sight bill or duly presented for
acceptance first and then presented for
payment at maturity if it is a time bill.
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3.4 Acceptance
is a signification by the drawee of his
assent to the order given by the drawer,
He engages,by signing his name across
the face of the bill that he will pay when it
falls due.
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So presentment for acceptance is legally
necessary to fix the maturity date of a draft
payable after sight,Valid acceptance
requires,
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2 conditions
① the word,accepted” must be written on
the bill to be followed by the signature of
the acceptor and the date of acceptance,
A mere signature of the acceptor without
additional words is also justified,
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② It ought not be expressed that the
drawee will carry out his promise by any
other means than the payment of money.
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Types of acceptance
lGeneral acceptance
without any restrictions while confirming
acceptance
lQualified acceptance
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Conditional acceptance
ACCEPTED
1 June,2004
Payable on delivery of
Bills of Lading
For ABC Bank Ltd.,London
Signature
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Partial Acceptance
for example,supposing the amount is GBP
1000.00
ACCEPTED
3 June,2004
Payable for amount of
GBP 800.00 only
For ABC Bank Ltd.,London
Signature
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Local Acceptance
ACCEPTED
5 June,2004
Payable at The Hambros
Bank and there only
For ABC Bank Ltd.,London
Signature
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Qualified Acceptance as to time
( supposing the tenor is 3 months after date
(of issue)
ACCEPTED
5 June,2004
Payable at 6 months after date
For ABC Bank Ltd,,London
Signature
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3.5 Payment
Act of payment is performed when a draft is
paid,A bill is discharged by payment in
due course only when such payment is
made by or on behalf of the drawee or the
acceptor
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3.6 Dishonor
Act of dishonor is a failure or refusal to
make acceptance on or payment of a draft
when presented
l Dishonour by non-acceptance
l Dishonour by non-payment
Payment is impossible because of the
payer’s bankruptcy,death or his evading.
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3.7 Notice of dishonor
A notice on which default(不履约 /违约）） of
acceptance or of payment by the drawee or the
acceptor is advised,to be given by holder of a
draft to the drawer and all the endorsers whom
he seeks to hold liable for payment,A notice of
dishonor must be given by or on behalf of the
holder or an endorsee on the next working day
after the dishonor of the draft.
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3.8 Protest
A written statement under seal drawn up and
signed by a notary public or other authorized
person for the purpose of giving evidence that a
draft has been presented by him for acceptance
or for payment but dishonored.
If there is no notary public in the place of
dishonour,the protest can be made by a local
Famous Man before two Witnesses,The
charges involved is borne by the holder.
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3.9 Right of recourse
In the event of a draft being dishonored,the
holder has a right of recourse against the
other parties thereto,that is,a right to
claim compensation from the drawer or
any endorser.
Recourse:The right to claim a refund from
another party,
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Three conditions
l （ 1） Present within a legal time limit
l （ 2） Notice within specified time (the following
day after dishonour as per Bills of Exchange Act
1882)
l （ 3） Dishonour must be within specified time
(within one working day after dishonour and
make the protest by a notary public as per Bills
of Exchange Act 1882)
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Time limit
Bills of Exchange Act,6 years to retain
the right of recourse
Geneva conventions of 1930,1 year for
a holder to his pre-endorser,6 months
for an endorser to his pre-endorser.
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3.10 Acceptance for honor supra
protest
Acceptance for honor supra protest is an act
performed by the acceptor for honor,who
accepts the bill supra protest,for the honor
of any party liable thereon or for the honor
of the person for whose account the bill is
drawn,A bill may be accepted for honor
for only a part of the sum drawn payable.
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3.11 Payment for honor supra
protest
Payment for honor supra protest is an act
similar to acceptance for honor supra
protest in the sense that it vindicates the
honor of a party liable on a bill.
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3.12 Guarantee
Act of guarantee is performed by a third
party called guarantor,who engages that
the bill will be paid on presentation if it is a
sight bill or accepted on presentation and
paid at maturity if it is a time bill.
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4,Act of bills
4.1 The French Acts
1673,it had the stipulations about
instruments,In 1807,it was edited into its
commercial code and lied as one of its
chapter,
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4.1.2 Characteristics
l Focuses on the effect of clearance only.
The relations between bills and base cannot
be separated,
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Relations
Relations of bills refer to the relations
among drawers,payees,payers,
acceptors,endorsers and so on.
Relations of base refer to relations out of
bills such as:
l Cause relations
l Capital relations
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4.2 The German Acts
It was brought into effect in Apr,16th,
1871 including bills of exchange and
promissory notes only,The act of checks
was established in 1908.
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Characteristics
l Focuses on negotiable and credit effect.
l Non-causative Nature,
l Requisite in Form,
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4.3 Bill of Exchange Act 1882
similar to the German Acts,It focuses on
protecting the benefit of the holder in due
course and doesn’t focus on form,
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4.4 Uniform Law
lUniform Law for Bills of Exchange &
Promissory Notes,1930
Uniform Law for Cheques,1931
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4.5 Difference between the Geneva
Uniform Law and the Common Law
Classifications
Right of holders
“holder in value and in due course” v.s
“lawful holder” (successive endorsement)
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Sequel (后果 ） of forged endorsement
“real holder” v.s,faithful holder”
Requisite in Form
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5 Bill of Exchange (Draft)
5.1 Definition:
is 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 the order of a specified person,or to
bearer.
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5.2 Main Parties involved
lDrawer
lDrawee
Payee
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Specimen
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5.3 Main Items
l The word,Exchange”
l An unconditional order in writing
l Time and place of issue
l Tenor (time of payment)
l Amount in words and figures
l Name and address of the drawee
lDrawer’s signature
l Name of the payee
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EXPRESSIONS OF DECIMAL
As per XXX.60,there are several different
expressions for yr reference,
SAY xxx AND POINT SIXTY ONLY
SAY XXX AND POINT SIX ZERO ONLY
SAY XXX AND CENT SIXTY ONLY
SAY XXX AND 60/100 ONLY
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5.4 Other items
L Numbers and copies of a bill of exchange (A
set of Bill)
l Place of payment (the place besides the payer’s
name is regarded as the place of payment
unless otherwise stipulated)
L Interest and its Rate
Payable in other currency (rate of foreign
exchange should be shown on,Which cannot
conflict with the local law in the place where
payment made)
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5.5 Flow chart
Drawer Payer
A B
Payee or order
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5.5 Types
l Clean bill and documentary bill
l Banker’s draft and commercial (trader’s)
draft
A bill is called a banker’s draft when the
issuer and the payer are both a bank.
A bill is called a commercial draft when the
issuer and the payer are both a trader.
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lBanker’s acceptance bill and commercial
(trader’s) acceptance bill
lSight bill and usance (time) bill
Order bill or bearer bill or straight bill
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5.6 Discounting
Where a payee of a term bill requires
payment immediately,a bank may
discount the bill,i.e,make immediate
payment deducting an amount for interest
over the term of the bill.
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6 Promissory Note
6.1 Definition
A promissory note is an unconditional
promise in writing made by one person to
another signed by the maker,engaging to
pay,on demand or at a fixed or
determinable future time,a sum certain in
money to,or to the order,of a specified
person or bearer.
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Specimen
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6.2 Parties involved
lDrawer
Payee
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6.3 Main Items
l The words,promissory note”
l An unconditional promise to pay
l Name of the payee or his order
lDrawer’s signature
l Place and date of issue
l Tenor
l A certain sum of money in words and figures
Place of payment (It will be regarded as the place
of payment if not shown)
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6.4 Types
Trader’s Notes
It is barely used because of the unknown
standing of the issuer or he is in any way
financially suspect.
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Banker’s notes
They are widely used in banking and
issued by commercial banks payable to
specified person or to bearer.
The issuance of banker’s notes payable to
bearer is prohibited by government while it
is allowed to issue banker’s notes payable
to specified person
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International Money Order
Issued by the banks set up in clearing
centers for travelers.
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Traveler’s Check
The agent that issues the traveler’s checks
is the payer.
In fact,it is a deposit without interest for a
purchasers in his issuing agency,
It is about to draw the deposit when
cashing a check,so it is named check,
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Certificate of Deposit (CD)
(1) US-dollar Negotiable CD
(2) Yankee CD
(3) Euro-dollar Negotiable CD,FIRST
NATIONAL CITY BANK in 1996 for the
first time in London within 1 year
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Central Banker’s Notes
It is also called Bank Note,In China it is
called fund (基金 )
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Various Bonds
Usance promissory notes usually within
one year.
For example,At 91 days after date fixed
amount Local Government Promissory
Note,If this blank is not filled in,the bill will
be paid to bearer.
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Treasury Bills
They are usually large bills in western
countries and the tenor is usually 91 days.
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7 Check (cheque)
7.1 Definition
A check is an unconditional order in writing
addressed by the customer (the drawer) to
a bank (the drawee) signed by that
customer authorizing the bank to pay on
demand a certain sum of money to or to
the order of a designated person or to
bearer (the payee).
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Briefly speaking,a cheque is a bill of
exchange drawn on a bank payable on
demand,
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specimen
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7.2 Parties involved
l Drawer
l Payer
l Payee
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7.3 Main Items
l The word,check”
l An unconditional order in writing
l Name and place of the paying bank
l Drawer’s signature
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l Place and date of issue (the place besides the
issuer’s name is regarded as the place of issue if
the place of issue is not shown)
l The word,at sight” (It will still be regarded as on
demand if not shown)
l A certain sum of money in words and figures
l Name of the payee or his order
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7.4 Types
l Cheque payable to order
l Cheque payable to bearer
l Crossed checks and Open cheque
General crossing
Special crossing
Certified checks
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7.5 Cautions
rubber cheque/ forged cheque
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8,Comparisons
