Terms:

1. Promissory Note A negotiable 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 fixed or determinable time a sum certain in money to order or to bearer. 2. Bill of Exchange A bill of exchange 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 order or to bearer. 3. Check A check is a bill of exchange drawn on a bank payable on demand. . Order Instrument !nstrument payable to a "named person or his order# or "to the order of a named person# $. Bearer Instrument !nstrument payable to bearer or to fictitious or impersonal payee or bearer or to an estate, or to cash, or when the only or last indorsement is an indorsement in blank. %. Real Defense Are defenses attached to the instrument itself and can be set up against the whole world, including the holder in due course. !t is a defense against everybody because the right to be enforced has never existed, or ceased to exist. &he !nstrument cannot be enforced against a person to whom real defenses are available. '. Personal Defense &hese are personal to the person or subsequent holder against whom the instrument is being enforced.

&hese defenses grow out of the agreement or conduct of a particular person which renders it inequitable for him to enforce it against the party sought to be made liable, but not available against the holder in due course. ! "older In Due Course A holder in due course is a holder who has taken the instrument under the following conditions ( ) *e took the instrument complete and regular upon its face. + ) *e becomes the holder before it was overdue, and without notice that it had been previously dishonored, it such was the fact. , ) *e took it in -ood ,aith and ,or .alue ! / &hat at the time it was negotiated to him, he had no notice of any !nfirmity in the instrument or defect in the title of the person negotiating it. #! $% & "our Rule !f a bill is presented to the drawee for acceptance, the drawee is not bound to accept immediately. *e is allowed 2 /hours after delivery to ascertain the state of accounts between himself and the drawer. 0ntil the time expires, the holder has no right to demand an answer, and if no answer is given to treat the bill as accepted. *owever, if the acceptance is given, the effect of acceptance is retroactive from date of presentation. ' & Day Rule !s the number of days which the bank clears the check. 1hen you pay a cheque into your account it has to be sent to the drawer2s for payment for the bank to decide if it will honour the cheque.

RE()TION*"IP
3450!6!&46 +, 74-+&!A8!9!&: +, A7 !76&30;47& 1. !t must be in writing and signed by the maker or drawer. 2. !t must contain unconditional promise or order to pay a sum certain in money 3. !t must be payable on demand or at a fixed or determinable future time.

. !t must be payable to order or bearer $. 1here the instrument is addressed to a drawee he must be named or otherwise indicated therein with reasonable certainty. <!7=6 +, !7=+364;47& 1. As to method of negotiation a. 6>4(!A9 b. 89A7< 2. As to the kind of title transferred a. 346&3!(&!.4? or b. 7+7 ) 346&3!(&!.4 3. As to scope of liability of indorser a. 50A9!,!4= or b. 0750A9!,!4= or -4743A9 . As to presence or absence of limitations a. (+7=!&!+7A9 b. 07(+7=!&!+7A9 $. &he other kinds of !ndorsements a. @+!7& b. 60((466!.4 c. !334-09A3 or A7+;A9+06 d. ,A(09&A&!.4 <!7=6 +, *+9=436 *+9=436 6!;>9:A 6!;>94 *+9=43 A person who qualifies as a holder but does not meet all the conditions to qualify as a holder in due course. *+9=436 ,+3 .A904 !s one who has given a valuable consideration for the instrument issued or negotiated to him. *+9=436 !7 =04 (+0364 A >ayee or indorsee who is in possession of the instrument, or the bearer the thereof. >A3&!46 9!A894 +7 74-+&!A894 !76&30;47& 1. >3!;A3: 9!A894 a. &he maker of a promissory note b. &he acceptor of a bill of exchange c. &he certifier of a check 2. 64(+7=A3: B(+7=!&!+7A99:C 9!A894D a. &he drawer of a bill and

b. &he endorser of a note or a bill 3. 7+& 9!A894 a. &he =rawee until he accepts the instrument in which case he becomes an acceptor. 6&4>6 !7 &*4 9!,4 +, A 74-+&!A894 !76&30;47& 1. !ssuance 2. 7egotiation 3. >resentment for Acceptance in certain kinds of bills of 4xchange . Acceptance $. =ishonor by non/acceptance %. >resentment for payment '. =ishonor by non/payment E. 7otice of dishonor F. >rostest in some casese 1G. =ischarge