Law for Business, 15e by Ashcroft Chapter 20: Nature of Negotiable Instruments Law for Business, 15e, by Ashcroft, © 2005 West Legal Studies in Business, a Division of Thomson Learning
20.2 Chapter 20 Objectives Discuss how negotiable instruments are transferred. Differentiate between bearer paper and order paper. Describe an electronic fund transfer. Certified check Pay to$ Dollars
20.3 Negotiable Instruments Negotiable instruments are writings that can be transferred from person to person as a substitute for money or an instrument of credit. The law merchant refers to rules applied by 15th century English merchants who had disputes. These were settled by special courts set up by merchants themselves.
20.4 Negotiable Instruments Negotiation is transferring ownership of negotiable instrument to another party. An indorsement is the signature of the owner made on the back of an instrument. Holders in due course acquire rights superior to those of the original owner.
20.5 Order and Bearer Paper What is the difference between order paper and bearer paper? What is the difference between a draft and a promissory note? What else can a draft be called? Is a draft considered order paper or bearer paper? Can one make bearer paper into order paper easily? How? Activity
20.6 Parties to Negotiable Instruments Payee Drawer Drawee Acceptor Maker Payee Drawer Drawee Acceptor Maker Bearer Holder Holder in due course Indorser Indorsee Bearer Holder Holder in due course Indorser Indorsee
20.7 Electronic Fund Transfers An electronic fund transfer (EFT): transfer of funds initiated by electronic terminal, telephonic instrument, or computer or magnetic tape that instructs or authorizes a financial institution to debit or credit an account
20.8 Types of Electronic Fund Transfers Preauthorized debits and credits Point-of-salePoint-of-sale Check truncation Check truncation ATMsATMs
The next chapters give you more information about negotiable instruments. Common Stock