dpb 3023- negotiable instruments

8/19/2019 Dpb 3023- Negotiable Instruments

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NEGOTIABLE

INSTRUMENTSMdm Siti Fatimatuz Zahra Hussin

DPB 3!3


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"#urs$ Out%in$ Part I & D$t$rmin$ N$'#tia(%$ Instrum$nts

D$)niti#n

F$atur$s

T*+$s

Part II& Bi%%s #, E-.han'$

D$)niti#n

"hara.t$risti.s

N$'#tiati#ns

A..$+tin' BOE

End#rs$m$nts

D$%i/$r*

Part III& "h$0u$s

D$)niti#n

T*+$s

"r#ssin' #, .h$0u$s

Pr#t$.ti#ns t# (an1s 2"#%%$.tin' Pa*in' (an1s4

A%t$rati#ns #n .h$0u$s its $5$.ts

T$rminati#n #n (an1$r6s auth#rit* t# +a*


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Part I & D$t$rmin$ N$'#tia(%$ Instru

D$)niti#n

F$atur$s

T*+$s


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Defnition

A n$'#tia(%$ instrum$nt is a d#.um$nt .#ntainin' an und$rta1in' t# +a* a

m#n$* 7hi.h ma* ($ trans,$rr$d (* d$%i/$r*8 #r (* $nd#rs$m$nt and d$%i/

Features

- The title to it passes on delivery or delivery plus endo

- The holder who is in possession of it can sue in his ow

- Notice of assignment need not be given to the debto

- The transferor of a negotiable instrument can give a than he himself has.


5/28

T*+$s #, N$'#tia(%$ instrum$nts

1) an order to pay (encompasses drats and checks)

a) Drat (or a bill o exchange)& IN;OL;ES 3 PARTIES& Anun.#nditi#na% 7ritt$n #rd$r t# +a* (* 7hi.h th$ +art* .r$adra,t 2th$ drawer) #rd$rs an#th$r +art* 2th$ drawee), t*+i.t# +a* m#n$* t# a third +art* 2th$ payee)


6/28

T*+$s #, N$'#tia(%$ instrum$nts

1) an order to pay (encompasses drats and checks)

a) Drat (or a bill o exchange)& IN;OL;ES 3 PARTIES& An un.#nditi#n7ritt$n #rd$r t# +a* (* 7hi.h th$ +art* .r$atin' th$ dra,t2th$ drawer) #rd$rs an#th$r +art* 2th$ drawee), t*+i.a%%* a (an18 t# +m#n$* t# a third +art* 2th$ payee)


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Part II& Bi%%s #, E-.han'$

D$)niti#n"hara.t$risti.s

N$'#tiati#ns

A..$+tin' BOE

End#rs$m$nts

D$%i/$r*


9/28

D$)niti#n

Bi%% #, $-.han'$ $na(%$s a s$%%$r #, '##ds #r s$r/i.$s t# r$.$i/$ his

as +#ssi(%$ 7hi%$ $na(%in' his (u*$r t# d$,$r +a*m$nt ,#r a +$ri#d

%ection & (1)'

a4 an un.#nditi#na% #rd$r in 7ritin'

(4 addr$ss$d (* #n$ +$rs#n t# an#th$r

.4 si'n$d (* th$ +$rs#n 'i/in' it

d4 r$0uirin' th$ +$rs#n t 7h#m it is addr$ss$d t#& < +a* #n d$ma

< at a )-$d #r d$t$rmina(%$ ,utur$ tim$

$4 a .$rtain sum #, in m#n$*

,4 t# th$ #rd$r #, a s+$.i)$d +$rs#n #r t# ($ar$r


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"hara.t$risti.s

?4 Th$r$ ar$ thr$$ +arti$s t# a (i%%

!4 Th$ (i%% must ($ an #rd$r t# +a*

34 Th$ (i%% must ($ in 7ritin's t# an#th$r

@4 Th$ (i%% must ($ addr$ss$d (* #n$ +$rs#n #r (#d* #, +$rs#n

4 Th$ (i%% must ($ si'n$d

4 Th$ (i%% must #rd$r +a*m$nt #, a sum .$rtain in m#n$* and n#t in '##ds #

C4 Th$ (i%% must ($ +a*a(%$ #n d$mand #r at a )-$d #r d$t$rmina(%$ ,utur$ tim

4 Th$ (i%% must ($ +a*a(%$ t# #r t# th$ #rd$r #, a s+$.i). +$rs#n #r t# ($ar$r


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A..$+tin' BOE

Defnition and requisites o acceptance

S$.ti#n ?C2?4

Th$ a..$+tan.$ #, a (i%% is th$ si'ni).ati#n (* th$ dra7$$ #, his ass$nt t# th$ #rd

2!4 An a..$+tan.$ is in/a%id un%$ss it .#m+%i$s 7ith th$ ,#%%#7in' .#nditi#ns8 nam

a4 it must ($ 7ritt$n #n th$ (i%% and ($ si'n$d (* th$ dra7$$9 Th$ m$r$ si'natu

7ith#ut additi#na% 7#rds is su.i$nt

(4 it must n#t $-+r$ss that th$ dra7$$ 7i%% +$r,#rm his +r#mis$ (* an* #th$r m

+a*m$nt #, m#n$*9ime or acceptance

S$.ti#n ? & A (i%% ma* ($ a..$+t$d

.4 ($,#r$ it has ($$n si'n$d (* th$ dra7$r8 #r 7hi%$ #th$r7is$ in.#m+%$t$

d4 7h$n it is #/$rdu$8 #r a,t$r it has ($$n dish#n#ur$d (* a +r$/i#us r$,usa% t# +a*m$nt9


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ndorsements

An $nd#rs$m$nt is a si'natur$ #n th$ (a.1 #, th$ bill o exch7hi.h th$ +$rs#n t# 7h#m th$ n#t$ is +a*a(%$ trans,$rs it (* th$ n#t$ +a*a(%$ t# th$ ($ar$r #r t# a s+$.i). +$rs#n9

Deli*ery

S$.ti#n !?&

E/$r* .#ntra.t #n a (i%% #, $-.han'$ is .#nsid$r$d as in.#m+%$r$/#.a(%$8 unti% th$ d$%i/$r* #, th$ instrum$nt t# its int$nd$d

http://www.duhaime.org/LegalDictionary/B/BillofExchange.aspxhttp://www.duhaime.org/LegalDictionary/B/BillofExchange.aspx


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Part III& "h$0u$s

D$)niti#n

T*+$s

"r#ssin' #, .h$0u$s

Pr#t$.ti#ns t# (an1s 2"#%%$.tin' Pa*in' (an1s4

A%t$rati#ns #n .h$0u$s its $5$.ts

T$rminati#n #n (an1$r6s auth#rit* t# +a*


15/28

D$)niti#n

%ection +&' ,ill o xchange -ct 1./.

"h$0u$ is a (i%% #, $-.han'$ dra7n #n a (an1$r and +a*d$mand9

Characteristics o cheques

?4 it is an un.#nditi#na% #rd$r in 7ritin'

!4 it is si'n$d (* th$ dra7$r

34 it is dra7n #n a (an1$r 2dra7$$4

@4 it #rd$rs th$ (an1$r t# +a* a .$rtain sum #, m#n$* #n d$mand9

4 it is dra7n in ,a/#r #, a s+$.i)$d +$rs#n 2+a*$$4 #r t# his #rd$r #r in ,a/#r #


16/28

T*+$s

1) 0ndated Cheques

%ection & (/) (a)

A (i%% is n#t in/a%id (* r$as#n that it is n#t dat$d a%th#u'h a (an1$r n$$d n#

S$.ti#n ?! and ! a%%#7 a h#%d$r #, an undat$d .h$0u$ t# )%% in th$ tru$ dat(ut must d# s# 7ithin a r$as#na(%$ tim$9

) *erdue or stale cheques

A .h$0u$ is #/$rdu$ i, it has ($$n in .ir.u%ati#n ,#r an unr$as#na(%$ %$n'th3 2349 Th$ #nus #, +r#/in' that a .h$0u$ is #/$rdu$ is #n th$ +$rs#n tr*in%ia(i%it* #n it9


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&) -nte dated and post2dated cheques

%ection 1& ()'

A .h$0u$ 7hi.h is dat$d ma* ($ ant$ dat$d8 +#st dat$d #r

Ante-dated cheque

This t*+$ #, .h$0u$ ($ars a dat$ $ar%i$r than th$ dat$ #, a.(a.1


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/) Crossed cheque and open cheque

Crossed cheque

2 Di.u%t ,#r an unauth#riz$d +$rs#n t# #(tain +a*m$.#unt$r9

< It .an #n%* ($ +aid thr#u'h a (an18 and th$r$,#r$ th$+r$s$ntin' th$ .h$0u$ 7#u%d ha/$ a (an1 a..#unt9

< S$.ti#n C& A .r#ssin' is a mat$ria% +art #, th$ .h$0.ann#t ($ a%t$r$d (* an*#n$ in an* 7a* $-.$+t as auth#s$.ti#n CC9


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"r#ssin' is an instru.ti#n t# a (an1 as th$ m#d$ #, +a*m$nt8 th$ (an1 7i%% ($

+a*m$nt mad$ in .#ntra/$nti#n #, th$ .r#ssin' s$.ti#n C 2!4< It is t# minimiz$ ,raud (* .#n/$*in' instru.ti#ns that +a*m$nt sh#u%d#n%* t#8 #r thr#u'h a (an1 #r #th$r instru.ti#ns as t# th$ mann$r #, +a*m$

Open cheque

< It .an ($ $-.han'$d ,#r .ash a.r#ss th$ .#unt$r $/$n ($,#r$ th$ %#ss (* th$ #7n$r9


20/28

"r#ssin' #, .h$0u$s

A .h$0u$ is a n$'#tia(%$ instrum$nt9 Durin' th$ +r#.$ss #, .ir.u%ati#n8 a .h$%#st8 st#%$n #r th$ si'natur$ #, +a*$$ ma* ($ d#n$ (* s#m$ #th$r +$rs#n ,#Und$r th$s$ .ir.umstan.$s th$ .h$0u$ ma* '# int# 7r#n' hands9

"r#ssin' is a +#+u%ar d$/i.$ ,#r +r#t$.tin' th$ dra7$r and +a*$$ #, a .h$0uand #rd$r .h$0u$s .an ($ .r#ss$d9 "r#ssin' +r$/$nts ,raud and 7r#n' +a*m#, a .h$0u$ m$ans Dra3ing 3o #arallel 4ines a.r#ss th$ ,a.$ #, th$ ..r#ssin' is n$.$ssar* in #rd$r t# ha/$ sa,$t*9 "r#ss$d .h$0u$s must d$ +r$s

th$ (an1 #n%* ($.aus$ th$* ar$ n#t +aid at th$ .#unt$r9

ypes'

General crossing Special crossing

‘Not negotiable’ crossing

‘Account payee only’ crossing


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1) General crossing

'$n$ra%%*8 .h$0u$s ar$ .r#ss$d 7h$n?4Th$r$ ar$ t7# trans/$rs$ +ara%%$% %in$s8 mar1$d a.r#ss its ,a.$ #r

!4 Th$ .h$0u$ ($ars an a((r$/iati#n 5 Co" ($t7$$n th$ t7# +ara%%$% %in$s #r

34 Th$ .h$0u$ ($ars th$ 7#rds $ot $egotiable ($t7$$n th$ t7# +ara%%$% %in$

@4 th$ .h$0u$ ($ars th$ 7#rds -6c" #ayee ($t7$$n th$ t7# +ara%%$% %in$s9• A .r#ss$d .h$0u$ .an ($ mad$ bearer cheque (* .an.$%%in' th$ .r#ssin' and 7ritin' that th$ .r#ss

a-in' th$ ,u%% si'natur$ #, dra7$r9

) Special crossing

• Jh$n a +arti.u%ar (an1Ks nam$ is 7ritt$n in ($t7$$n th$ t7# +ara%%$% .h$0u$ is said t# ($ s+$.ia%%* .r#ss$d9


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Not negotiable’ crossing

Th$ 7#rds Kn#t n$'#tia(%$K .an ($ add$d t# '$n$ra%


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Pr#t$.ti#ns t# (an1s 2"#%%$.tin' Pa*in'

Collecting ,anker!s #rotection'

A "#%%$.tin' Ban1$r is #n$ 7h# und$rta1$s t# .#%%$.t /ari#us t*+$sr$+r$s$ntin' m#n$* in ,a/#ur #, his .ust#m$r #r his #7n ($ha%, ,r##, th$s$ instrum$nts9

S$.ti#n & th$ .#%%$.tin' (an1$r is n#t %ia(%$ t# th$ tru$ #7n$r #,(an1$r6s dra,t i, his tit%$ t# th$ instrum$nt +r#/$s d$,$.ti/$ +r#/id#r dra,t 7as #n$ .r#ss$d '$n$ra%%* #r s+$.ia%%* t# hims$%, and .#%%$.ust#m$r is '##d ,aith and 7ith#ut n$'%i'$n.$9

conditions:

i) The cheque he collected is a crossed cheque.

ii) He collected such crossed cheque only for his customer as an agent & n

value.

iii) He collected such crossed cheque in good faith and without negligence.


24/28

#aying ,anker!s #rotection'

Pr#t$.ti#n #, (an1$rs +a*in' unind#rs$d #r irr$'u%ar%* ind#rs$d .h$0u$s8

S$.ti#n !9 2?4 Jh$r$ a (an1$r in '##d ,aith and in th$ #rdinar* .#urs$ #,.h$0u$ dra7n #n him 7hi.h is n#t ind#rs$d #r is irr$'u%ar%* ind#rs$d8 h$ ds#8 in.ur an* %ia(i%it* (* r$as#n #n%* #, th$ a(s$n.$ #,8 #r irr$'u%arit* in8 ih$ is d$$m$d t# ha/$ +aid it in du$ .#urs$9

2!4 Jh$r$ a (an1$r in '##d ,aith and in th$ #rdinar* .#urs$ #, (usin$ss +instrum$nt as th$ ,#%%#7in'8 nam$%*&

a4 a d#.um$nt issu$d (* a .ust#m$r #, his 7hi.h8 th#u'h n#t a (i%% #, $-.ht# $na(%$ a +$rs#n t# #(tain +a*m$nt ,r#m him #, th$ sum m$nti#n$d in

(4 a dra,t +a*a(%$ #n d$mand dra7n (* him u+#n hims$%,8 7h$th$r +a*a(%#.$ #r s#m$ #th$r #.$ #, his (an18 h$ d#$s n#t8 in d#in' s#8 in.ur anr$as#n #n%* #, th$ a(s$n.$ #,8 #r irr$'u%arit* in8 ind#rs$m$nt8 and th$ +adis.har'$s th$ instrum$nt9


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26/28

Customer!s duty o care against raudulent alterations

< +art #, th$ im+%i$d t$rms #, th$ .#ntra.t ($t7$$n a .ust#m$r and a (a

< A .ust#m$r must $-$r.is$ du$ .ar$ in dra7in' .h$0u$s s# as n#t t# ,a.(an1$r is +r#t$.t$d i, th$r$ is a ,raud du$ t# th$ .ust#m$r6s n$'%i'$n.$9

< It +r#t$.ts +a*in' (an1$rs ,r#m %#ss .aus$d (* th$ dra7$r6s .ar$%$ssnthat a%t$rati#n is n#n


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T$rminati#n #n (an1$r6s auth#r+a*

G$n$ra% ru%$&

A (an1$r is und$r a dut* t# h#n#ur his .ust#m$r6s .h$0uam#unt #, his .r$dit (a%an.$ and an* a'r$$d #/$rdra,t9 I7r#n'%* r$,us$s t# h#n#ur a .h$0u$8 th$ .ust#m$r .an s

.hen the ban# has no authority to pay/

Chartered $an# % 0ong Chan (1,+ 1 &!" 12

?4 B* countermand o payment8 that is 7h$r$ th$ .ust#m$r instru.ts th$ (a+a*m$nt #n a .h$0u$ dra7n S$.ti#n C 2a4

!4 B* n#ti.$ #, th$ customer!s death S$.ti#n C 2(4

34 B* n#ti.$ #, th$ .ust#m$r ha/in' ($.#m$ insane

@4 B* s$r/i.$ #, a garnishee order #r #th$r .#urt #rd$r atta.hin' #r d$a%in' .ust#m$r6s m#ni$s in th$ hands #, th$ (an1$r


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4 Jh$r$ th$r$ is a deect in the presenter!s title8 1n#7%$d'$ that&

< th$ .ust#m$r has committed an act o bankruptcy und$r th$ Ba?C

< a bankruptcy petition has ($$n +r$s$nt$d a'ainst th$ .ust#m$r

< a recei*ing order has ($$n mad$ a'ainst th$ .ust#m$r

4 =n#7%$d'$ that th$ .ust#m$r8 in dra7in' th$ .h$0u$ is int$ndin' t# .#mmit trust 7h$r$ th$ ,unds a5$.t$d ar$ trust ,unds9

C4 Jh$n th$ .ust#m$r assi'ns th$ credit balance o his account to another

4 Jh$n th$ .ust#m$r has insu8cient unds t# .#/$r th$ am#unt #, th$ .h$

4 On a r$.$i+t #, a n#ti.$ ,r#m th$ .ust#m$r closing his account

dpb 3023- negotiable instruments

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