1. 20.1 b a c kn e x t h o m e Chapter 20 Objectives Discuss how negotiable instruments are transferred. Differentiate between bearer paper and order paper. Describe an electronic fund transfer. © 2002 West Educational PublishingTo accompany Law for Business, 14e, by Ashcroft and Ashcroft Common Stock

2. 20.2 b a c kn e x t h o m e Negotiable Instruments Negotiable instruments are writings that can be transferred from person to person as a substitute for money or as 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.

3. 20.3 b a c kn e x t h o m e 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.

4. 20.4 b a c kn e x t h o m e 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? Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss

5. 20.5 b a c kn e x t h o m e Parties to Negotiable Instruments  Payee  Drawer  Drawee  Acceptor  Maker  Bearer  Holder  Holder in due course  Indorser  Indorsee

6. 20.6 b a c kn e x t h o m e Electronic Fund Transfers What is an electronic fund transfer? What are the benefits of EFT? What are the drawbacks of EFT to the consumer? To the financial institution? Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss Let’s Discuss

7. 20.7 b a c kn e x t h o m e Types of Electronic Fund Transfers Preauthorized debits and credits Point-of-salePoint-of-sale Check truncation Check truncation ATMsATMs