Negotiable Instruments Law
Essay title: Negotiable Instruments Law
CHAPTER XVI: PROMISSORY NOTES AND CHECKS
Definition
STALE CHECK ЎV is one which has not been presented for payment within a reasonable time after its issue. It is valueless, therefore, should not be paid.
CERTIFICATE OF DEPOSITЎV is a written acknowledgement by a bank of the receipt of money on deposit which the bank promises to pay the depositor, bearer, or to some other person, to the order of the depositor, or to him, or his order.
TRAVELERЎ¦S CHECK ЎV is one upon which the holderЎ¦s signature must appear twice, one to be affixed by him at the time it is issued and the second or counter-signature, to be affixed by him n the presence of the payee before it is paid, otherwise it is incomplete.
BOND ЎV is an evidence of indebtedness issued by a public or private corporation, promising to pay a sum of money on day certain in the future time.
Discussions
Give four differences between a check and an ordinary Bill of Exchange.
Check
Ordinary BOE
Always drawn on a bank
May or may not be drawn on a bank
Always payable on demand
Either payable on demand, or at a fixed or determinable future time
Supposed to be drawn against previous deposits of funds
Need not be drawn against a deposit
Need not be presented foe acceptance
Required to be present for acceptance in certain cases
Ordinarily intended for immediate payment
For circulation as an instrument of credit
The death of the drawer of a check with the knowledge of the bank revokes the authority of the bank to pay
The death of the drawer of an ordinary bill does not revoke the authority of the drawee to pay
Must be presented for payment within a reasonable time after its issue
Must be presented within a reasonable time after its last negotiation
The drawer of a check not presented within a reasonable time after its issue is discharged from liability to the extent of the loss caused by the delay
The drawer of an ordinary bill is totally discharged
When accepted or certified, the drawer and indorsers are discharged form liability
Remain liable in spite of acceptance
Give the effects of the certification of a check.
The effects of certification of a check are the following:
It is equivalent to acceptance
It discharges persons secondarily liable if procured by the holder
It operates as an assignment of the funds of the drawer in the hands of the drawee bank
The payee or holder, for all intents and purposes, becomes the depositor of the drawee bank, with rights and duties of one in such a situation
The drawer may not issue a stop payment order on the certified check.
Give the purpose of:
crossing a check
The purpose of crossing a check is to ensure payment to the payee particularly when it is forwarded by mail or when it is entrusted to an agent. Crossing a check, either generally or specially, does not destroy its negotiability.
Certifying