Jun 2 (edited) • General discussion
NEGOTIABLE INSTRUMENTS 101
A negotiable instrument is a written and signed promise or order to pay a definite amount of money. At its core, every negotiable instrument contains several key elements… it must be in writing, signed by the maker or drawer, contain an unconditional promise or order to pay, state a fixed amount of money, be payable on demand or at a definite time, and generally be payable to a specific payee, bearer, or order. Understanding these elements helps distinguish negotiable instruments from ordinary contracts, invoices, receipts, and agreements.
Common types of negotiable instruments include Promissory Notes, Drafts (Bills of Exchange), Checks, Cashier’s Checks, Certified Checks, and Certificates of Deposit (CDs). A Promissory Note is a promise to pay. A Draft is an order directing another party to pay. A Check is a type of draft drawn on a bank account. A Cashier’s Check is issued and guaranteed by a bank. A Certified Check is a personal check that the bank has verified and certified that funds are available. A Certificate of Deposit is a bank’s written acknowledgment that funds have been deposited and will be repaid according to its terms.
When studying negotiable instruments, it is important to understand the roles involved: the Maker creates a note, the Drawer issues a draft or check, the Drawee is the party directed to pay, the Payee is the recipient of payment, and the Holder is the one in possession of the instrument who is entitled to enforce it. These instruments have played a major role in commerce for centuries because they allow obligations and payments to be documented, transferred, presented, and settled in a standardized manner. Study the image carefully and learn the structure of each instrument, because once you understand the basic elements, you can quickly identify whether a document is a negotiable instrument or simply another type of commercial paper.
🎓 COURSE LINK:👇🏾
8
3 comments
NEGOTIABLE INSTRUMENTS 101
skool.com/prosperity-trust-credit-5528
Welcome to Prosperity Trust Credit & Funding.
What you don’t see shapes what you experience. knowledge alone isn’t enough… execution is everything!
Leaderboard (30-day)
1
+13
2
+9
3
+6
4
+5
5
+2
Powered by