credit-instrument

1、Functions of negotiable instruments,Seller,Buyer,as a means of payment,Buyer,Seller,as a credit instrument,Seller,Buyer,Local bank,Foreign bank,as negotiable instrument,Sample of Bill of Exchange,Exchange for GBP 5000.00,Beijing, 5th April, 2003,At 90 days after sight,pay to,Dafeng Corp. or order,th

2、e sum of Five thousand pounds only,To: HWT Incorporation address xxxxxxx,For SXO Compay, Ltd.,Li, Shen, manager,Bill of exchange: Definition, An unconditional order in writing,I order you to pay me for something I have sold you,Seller,Buyer,= in black n white, addressed by one person, the drawer, to

3、 another, the drawee,Bill of Exchange: Definition, signed by the person giving it(drawer),Li Shen, the manager, requiring the person(drawee) to whom it is addressed,To: HWT Incorporation, to pay on demand,or at sight,or at a fixed or determinable future time,At 60 days (after) sight,At 60-day (after

4、) date,On November, 1st 2003,At 90 days after B/L, etc,1. About time of payment (1) at sight, on demand, on presentation： sight draft (2) Time bill, term draft, usance bill a. Bills payable at xx days / x month(s) e.g. 60 days after sight, etc. b. Bills payable at xx days / x month(s) e.g. 60 days a

5、fter date, 3 months after date etc. c. Bills payable at xx days / x month(s) after stated date e.g. 60 days after May 1st, C. Bills payable on a fixed future date Payable on June 30th , payable on May 10th,d. Deferred Payment Bill (at xx days/month(s) after the date of shipment / presentation of doc

6、uments or other specified date) e. Calculation of maturity Counting from the next date after the sight date or issuing date,2. About draft amount (1)interest (a) annual interest, (b) counting date, (c) ending date. Uniform Law for drafts signed at Geneva specifies that counting should start from iss

7、uing date while commercial practice takes payment date as ending date.,5. The name and the address of payer The name and place of payer should be indicated in detail . You can not say “Bank of China, Tianjin Branch, for there are some branches in Tianjin, who would shuffle it to others and no one wo

8、uld pay it.,There are some special items used by some countries. (1) A set of bill “Pay this first of bill of exchange (second of the same tenor and date being unpaid) to” and on the second bill “Pay this second of bill of exchange (first of the same tenor and date being unpaid) to” (2)Referee in ca

9、se of need (3) Bankers designated as payer The banker would freeze the balance on the payers account for payment.,(4) Time limit for presentation (5) Notice of dishonor excused and protest waived Dishonour = non-acceptance or non-payment. The holder The lawcourt judges according to the protest wheth

10、er the draft was presented within the time limit and if the drawee was noticed. The protest is intended to attest this . Notice of dishonour and protest involve expenses,(6) Parties to a bill a. Drawer = seller = exporter b. Drawee = buyer = importer = payer c. Payee may be seller itself or the thir

11、d party deisgnated by seller, e.g. sellers bank. d. Endorser: when a draft is discount, its holder becomes endorser. e. Endorsee: the ones who buy the draft Holder: referring to payee, endorsee, bearer.,(8)Acceptor for honour : When time draft is dishonoured, a third partynonparty to a draft takes o

12、ver the duty of acceptor with some intention , thus becoming the debtor of the bill.,(9)Guarantor: duty is the same as the guaranteed (10) Holder in due course: (a) have taken the instrument in good faith without notice of any defect in its title; (b) has given valuable consideration; (c) prior endo

13、rsements prove real; (d) the contents of the bill is complete and not overdue when taking it.,(11) The order of duties Before acceptance: drawer；first endorser; second endorser. After acceptance：acceptor；drawer；first endorser Bill Behavior 1. Issuing a draft Fill in a draft and sign it Deliver the d

14、raft to payee,Act of Bill of Exchange,3. Presentment,- Sight draft: Presentation for payment,- Time draft: Presentation for acceptance presentation for payment,payee,payer,payee,payer,Three channels for presenation: - At the counter of paying bank To exchange out bills through the clearing bank whil

15、e the paying bank exchange in bills. If not returned, payments are accomplished. Sending bills to correspondent bank or associate bank who would present bills to drawee bank for collection. When holders entrust banks for collection, it is normal for presenting banks to add to endorsement the followi

16、ng words “prior endorsements guaranteed” 4. Acceptance,Some time drafts time is fixed by other means e.g. At 30 days after bill of lading date； The earlier the shipment ,the sooner the maturity date. At 60 days after presentation of documents； The earlier the presentation, the sooner the maturity da

17、te. On July 2, 2003，At 30 days after July 2, 2003，etc.,5. Payment Payment in due course： 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.,9. Right of Recourse

18、 presentation must be made within specified time. notice of dishonor must issued within specified time. protest must be made within specified time.,10. Category of bills Bankers draft or bank draft, drawn by bank on another bank. Trade bill, drawn by a trader on another trader or his bank. Traders a

19、cceptance bill, a time bill drawn on and accepted by trader. Bankers acceptance bill,a time bill drawn on bank and accepted by banker who pay for his client.,Sight bill = bill on demand = at sight = on presentation. Time bill or usance bill, payable at a fixed or determined future date. Clean bill,

20、without shipping documents attached. Documentary bill, with shipping documents attached. Local currency bill, denominated in local currency. Foreign currency bill, denominated in foreign currency. Direct bill, place of acceptance and payment is same. Indirect bill, place of acceptance and payment is

21、 not same Inland bill, domestic bill. Foreign bill, drawn in one country and pay in another country.,Sample of promissory note,Promissory Note for GBP 800,London, 8th Sept., 2003,At 60 days after date,We promise to pay,Beijing Arts and Crafts Corp. or order,The sum of Eight hundred pounds only,For B

22、ank of Europe, London,Haverty Furniture Company USD 100000.00 Atlanta GA Oct. 16, 2004 AT SEVENTY DAYS AFTER DATE WE PROMISE TO PAY TO THE ORDER OF BEARER THE SUM OF ONE HUNDRED THOUSAND US DOLLARS THE FIRST NATIONAL BANK OF CHICAGO, CHICAGO, ILLINOIS OR PAYABLE AT FULTON NATIONAL BANK, MAIN OFFICE,

23、 GEORGIA VALUE RECEIVED NOT VALID UNLESS AUTHENTICATED BY THE FIRST NATIONAL BANK OF HAVERTY FURNITUR CO. CHICAGO AS ISSUING AGENT signature Senior Vice President And Treasurer DUE DEC. 15, 2004,Check clearing,You,him/seller,his banks a/c,6Debit youre a/c and 7credit his bank a/c,10credit his a/c,Du

24、ties in a lost draft,1.Under English Law, the loss of lost draft is to be borne by A who cannot be a holder. Payer/acceptor cannot be discharged by payment to B.,2.Under Geneva Convention, A and B are holders , and payer is discharged by paying B. The loss of lost draft is borne by forger and HOLDER.,3. According to UNCITRAL