1. 1.1 20.1 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

2. 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

3. 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.

4. 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.

5. 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

6. 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

7. 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

8. 20.8 Types of Electronic Fund Transfers Preauthorized debits and credits Point-of-salePoint-of-sale Check truncation Check truncation ATMsATMs

9. 1.9 20.9 The next chapters give you more information about negotiable instruments. Common Stock