Exam 21: Negotiable Instruments

What is a time draft?

There are three types of bills of exchange, these are

Who is a holder in due course, and explain the requirements that must be met for a holder to be a holder in due course?

Describe the difference between a bearer instrument and an order instrument.

Where a bill of exchange is payable at sight, or after sight, then presentment is necessary.

Liability of the drawee on a bill of exchange is dependent on

Liability of the drawer, acceptor, or maker on a bill of exchange is dependent on the signing and delivery of the bill.

On April 5, Tim gave Winnie a cheque for $3000 drawn on his bank account to pay for a horse. The cheque was postdated to April 15. On April 7, the horse died, and Tim stopped payment on the cheque. On April 12, Winnie took Tim's cheque to Big Bank and endorsed it. Big Bank gave her cash in the face amount of the cheque. When Big Bank sent the cheque for clearing, Tim's bank refused to honour the cheque because of the stop payment Tim placed on it, and returned the cheque to Big Bank. Which of the following statements is true?

If a consumer bill or note is marked "consumer purchase" as required by the Bills of Exchange Act, the maker may raise a defence against a finance company that takes the bill or note for value and through endorsement based on breach of contract by the payee.

Which of the following is not a characteristic of a bill of exchange?

Explain the difference between negotiable instruments and other contracts.

Sight drafts can be used as collection devices.

Joseph obtains a draft that states as follows: "pay to the order of Joseph Daniels the sum of $1000." Joseph wants to negotiate this instrument to Jack Spratt to pay a debt owing to Jack. To negotiate this instrument Joseph must

A time draft is

A bill of exchange began as a document made by a merchant or banker instructing a government officials or lawyers in another city to make payment to a certain person or the bearer of the document.

A promissory note is presented for acceptance.

A court in British Columbia decided that a promissory note payable at a variable interest rate ( e.g. prime + 1% per annum) was not a negotiable instrument. Why might the court make this decision? How might the decision affect the rights of a third party obtaining the promissory note through endorsement?

Delivery of a negotiable instrument in payment

Certification is an undertaking by the bank to pay the amount of the cheque to the drawer when it is presented for payment.

A promissory note is not a bill of exchange.