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					Chapter 2

            Instruments



                   专业PPT/商演示设计制作
Review


 Question 1 :
 What’s the meaning of international settlement?

 Question 2 :
 How about the evolution of international settlement?

 Question 3 :
 How to establish a correspondent banking relationship?
What is a instrument?


 In a narrow sense, a instrument is a written document
  that contains an unconditional promise by the drawer
  to pay the payee or an unconditional order by the
  drawer to the drawee to pay the payee a fixed amount
  of money at a definite time.

 In this chapter, we focus on the narrow sense
  instruments: bills of exchange, promissory notes and
  cheques.
Characteristics of instruments

        Negotiability                      Non-causative
                                          nature



  Unconditional         Characteristics        Requisite
    promise or                                 in Form
   order to pay



        Returnability                     Presentment
What is a bill of exchange ?
What is a bill of exchange ?


 A bill of exchange is an unconditional order in writing,
  addressed by one person (the drawer) to another (the
  drawee), signed by the person giving it ,requiring the
  person to whom it is addressed to pay on demand, or
  a fixed or determinable future time a sum certain in
  money to or to the order of a specified person , or to
  bearer (the payee).
What is a bill of exchange ?
 Essentials to a bill of exchange
    1、The word “exchage”



                                                      4、Date and place of
                                                      issue



                    6、Name of payee

                    2、An unconditional order & 3、Pay a fixed amount of
                    money




5、Name and
                                     7、Signature of drawer
address of drawee
   Parties to a bill of exchange
                      drawer--the person giving the order to pay
Basic parties         drawee--the person to whom the order is
                       addressed
                      payee---the person to whom the sum certain money
                       is paid.


                           Endorser-- a payee or a holder who signs his
Derivative parties          name on the back of a bill of the purpose of
                            negotiation
                           Endorsee-- the party to whom the instrument
                            is transferred
                           Guarantor--the person who guarantees the
                            payment or acceptance of an instrument
                           Acceptor--the drawee that has accepted a
                            usance bill
                           Holder– the person who possesses an
                            instrument
Parties to a bill of exchange



     what is the relationship of these parties in a bill
     Of exchange ?


     How do these parties act to a bill of exchange?
 Acts relating to a bill of exchange

  Sight bill
                                             Endorsee
drawer               Payee                                           Endorsee
                                             (Endorser)
            issue   (Endorser)     Endorse                 Endorse   (Holder)




                                               Guarantor

                         present
   Drawee
Acts relating to a bill of exchange

 Issue:to issue a draft comprises two acts to be
  performed by the drawer. one is to draw a draft and sign
  it, the other is to deliver it to the payee.

 Endorsement: is made on the back of a bill of exchange.
  It is an act of negotiation and comprises two acts: one is
  to sign on the back of a draft, the other is to deliver it to
  the endorsee.
Acts relating to a bill of exchange

Types of endorsement
  1、Special endorsement(Endorsement in full)
    Special endorsement specifies the person to whom or to whose
    order the bill is to be payable in addition to the signature of the
    endorser. Example:
             Pay to the order of D company
             For B company, shanghai
             Signature

  2、 Blank endorsement
     It shows an endorser’s signature only and specifies no
    endorsee. If the bill is to be further transferred, mere delivery is
    required. Example:
              For A Co., London
              Signature
Acts relating to a bill of exchange

Types of endorsement
 3、Restrictive endorsement
   It will prevent the further negotiation of a bill.
   Example:Pay to A bank only/ Pay to A bank not negotiable
              For B company, shanghai
              Signature

  4、 Conditional endorsement
     Example: Pay to the order of B Co.
                  On delivery of B/L No.125
                  For A Co., London (Signature)

  5、 Endorsement for collection
    Example:Pay to the order of D bank for collection
 Acts relating to a bill of exchange

 Presentation:Presentation is to be made by the holder
  to the person designated as drawee for payment if it is a
  sight bill and for acceptance and payment if it is a time
  bill.
  --Sight draft: Presentation for payment
  -- Time draft: Presentation for acceptance
                 presentation for payment
 Acts relating to a bill of exchange

 Acceptence:acceptance of a bill is the signification by
  the drawee of a time bill of his assent to the order of the
  drawer.
  --General acceptence ( unconditional acceptence)
  --Qualified acceptence:
    conditional acceptence
    partial acceptence
    local acceptance
    qualified acceptence as to time
 Acts relating to a bill of exchange

 Payment: payment of a sight bill is made when the bill is
  presented to the drawee and payment of a time bill is
  made at maturity.
  -- Paid by payee and acceptance, not by endorser or drawer in
     recourse.
  -- Paid at maturity, not before it.
  -- Paid to holder in good faith, meaning that prior endorsements are
     real and continuous.

 Dishonor: a failure or refusal to make acceptance on or
  payment of a bill of exchange when presented to the
  drawee
 Acts relating to a bill of exchange

 Recourse: that the holder of bills of exchange has the
  right to claim compensation from the drawer and the
  endorsers in the event that the bill has been dishonored.
  When a bill is dishonored, the right of recourse will be
  accrued to the holder at once.
   -- the holder must give notice of dishonor to the drawer and all the
      endorsers for whom the holder may wish to make liable.
   -- Protest is a formal certificate given by a notary party or other
      authorized person to evidence that a bill of exchange has been
      dishonored
Acts relating to a bill of exchange

 Gurantee: gurantor engages that the bill will be paid
  on presentment or accepted on prensentment and
  paid at maturity.

 Acceptence for honour supra protest : When bill is
  dishonored by non-acceptance, the non-debtor
  accept the dishonored bill with consent of holder in
  an attempt against recourse and vindicate the credit
  of drawer and endorser.

 Payment for honor
Classification of a bill of exchange

 According to the drawer:
   Banker’s draft and trader’s draft
 According to the acceptor:
   Banker’s acceptance and trader’s acceptance
 According to the tenor:
   Demand draft/sight draft and time/usance draft
 According to whether commercial documents are
  attached thereto
  Clean draft and documentary draft
What is a promissory note
What is a promissory note

 A 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 a
  fixed or determinable future time a sum certain in
  money to or to the order of a specified person or
  to bearer.
Essentials to a promissory note




• The word “promissory note”   An unconditional promise to pay
• Name of the payee            Signature of the maker
• Place and date of issue      Tenor
• A sum certain in money       Place of payment
Types of notes

   Trader’s Note (Maker is a firm or a trader)
    *trader’s low creditworthiness

 Bank’s Note (Made by a bank payable to a specified
  person can be deemed as cash)
  *commercial banks can only issue notes payable to a
  specified person

 International Money Order (Denominated in US dollars
  with the maximum amount not exceeding USD2500)
Types of notes

 Trader’s Note (Maker is a firm or a trader)
  *trader’s low creditworthiness

 International Money Order (Denominated in US dollars
  with the maximum amount not exceeding USD2500)

 Central Banker's Notes

 Negotiable certificates of deposit

 Various bonds
Types of notes

    Treasury Bill (Government bond with the maker to be
    the Ministry of Finance)
Types of notes

     Traveler’s Cheque (It is drawn by the issuing bank upon
    itself payable to a traveler)
Types of notes

    Bank’s Note (Made by a bank payable to a specified
    person can be deemed as cash)
    *commercial banks can only issue notes payable to a
    specified person
  difference between a bill and a note

        A bill                    A Note

• an order to pay              • a promise to pay
• three parties                • two parties
• time bill needs acceptance   • time note needs not
                               Acceptance
• drawn in set in
  case of loss                 • drawn in one original
                               only
What is a cheque
What is a cheque

 A cheque is an unconditional order in writing addressed by
  the customer to a bank signed by that customer authorizing
  the bank to pay on demand a sum certain in money to or to
  the order of a specified person or bearer.
Essentials to a cheque




• The word “Cheque”
• Unconditional
• Writing
• Signed
Types of cheque

 According to the order
  *Demonstrative order; Restrictive order; Bearer order

 According to the Drawer
  *Banker’s cheque; Personal cheque

 According to whether or not the Cheque is Crossed
  *Open cheque; Cross cheque
  difference between a bill and a cheque



• Can be drawn on any one   • Can only be drawn on
                            banker
• time and sight
                            • Only on demand
• Present on due date
                            • Present within
                            prescribed date
Preview



    what is the difference among a bill of exchange,
    A promissory note and a cheque ?


    To find some ways for a trader to get finance by
    making use of a bill of exchange against which
    he can receive payments before due date?
Thank YOU
 which
    he can receive payments before due date?
Thank YOU

				
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