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Warm up Get a textbook. Look for the answer in Friday’s Notes What is a draft? What is a note?. Agenda. Warm up Discuss Notes—Negotiable Instruments Review Textbook Chapter 23 Reviewing what you learned—510 Critical Thinking -510 Reviewing what you learned -515 Critical Thinking-515 - PowerPoint PPT PresentationTRANSCRIPT
Warm upWarm upGet a textbookGet a textbook
• Look for the answer in Friday’s Notes• What is a draft?• What is a note?
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AgendaAgenda• Warm up• Discuss Notes—Negotiable
Instruments• Review Textbook Chapter 23
– Reviewing what you learned—510– Critical Thinking -510– Reviewing what you learned -515– Critical Thinking-515
• Handout—Checking Account and EFT’s• Word Puzzle Negotiable Instruments
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Negotiable Negotiable InstrumentsInstruments
Unit B Business LawUnit B Business Law
Objective 6.01Objective 6.01
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DraftsDraftsDraft - An order by one person to another person to pay
money to the order of a third person
• Three parties to a draft:A. Drawer – Orders the money to be paidB. Drawee – One ordered to pay the moneyC. Payee – One who is to receive the money
• Acceptor - A drawee who has written “accepted” on the document and signed his/her name
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• Types of Drafts:
Sight Draft – A draft payable as soon as it is presented to drawee for payment
Time Draft – Not payable until the lapse of a particular time period stated on a draft
Trade Acceptance – Used by a seller of goods to receive payment or to extend credit
Check – Draft drawn on a bank and payable on demand, can be called a demand draft• Honor – Pay when due• Dishonor – Refuse to pay when due• Stop Payment – Instruction for bank not to pay check
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• Types of Checks
Certified Check – A personal check that has been accepted by a bank before payment
Cashier’s Check – A check the bank draws on itself
Money Order – Draft issued by a post office, bank, express company, or telegraph company for use in paying or transferring funds for the purchaser
Traveler’s Checks – Draft drawn by a well-known financial institution on itself or its agent, used when traveling
Teller’s Check – Draft drawn by a bank on funds that it has on deposit at another bank
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NotesNotes
• A written promise by one person to pay money to another person
• An advantage of using a note is that it can be transferred without much difficulty to other people
• Evidence of a debt
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• Types of Notes:
•Demand Note – Payable whenever the payee demands payment
•Time Note – Payable at a future date that is written on the face of the note
• Installment Note – Paid in a series of payments
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Parties to a DraftParties to a Draft
Charles Paige 319619 Main StreetRaleigh, NC 27601 2-131/1034
_________July 16_____2006PayTo the Order of _____Donnie Tatum_________________________$100.50_One hundred and 50/100 -------------------------------------DOLLARSState Credit Union
For _______________ _Charles Paige______
DrawersAddress
PayeeCheck Date
Drawer’s Signature
Bank Name
CheckNumber
ABA #
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Parties to a NoteParties to a Note
MakerPayee
InterestRate
$ 700.00 Raleigh, NC May 23, 2006
Three months AFTER DATE ______I_____ PROMISE TO PAY
TO THE ORDER OF ___________Charles Paige_________________
Two thousand five hundred and no/100 - - - - - - - - - - - - -DOLLARS
PAYABLE AT ___________his firm___________________________
VALUE RECEIVED WITH INTEREST AT ___10%___ PER ANNUM
No. 319 Due March 19, 2007 Claudette Love
Face Value\Principal
Time\Term
Due Date
Face Value\Principal
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Certificate of DepositCertificate of Deposit
A written acknowledgment of the receipt of money and its promise to pay back the money, usually with
interest on the due date.
Has a higher interest rate than most savings accounts.
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Negotiability RequirementsNegotiability Requirements
• Must abide by UCC regulations• Must be in writing• Maker (party agreeing to pay money to
another person) or drawer (party that orders the drawee to pay money to the payee) has to sign
• There must be a definite amount money and time of payment known
• Must have words such as “to the order of” or “to bearer”.
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Rules Regulating Checking Rules Regulating Checking AccountsAccounts
1. Stale Checka. Check that is more than 6 months oldb. Bank may refuse without liability
2. Avoiding Negligencea. Drawer is responsible if negligent in writing checkb. Write figures close to $ sign and draw line through
spaces not usedc. Write close to “Pay to Order of” and draw line
through spaces not usedd. Figures and written amount should agreee. Sign name lastf. Write “Void” on check if mistake is made and in
check register
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3. Bad Checksa. Check issued against checking account
with insufficient funds to cover itb. States have statutes making it a larceny c. Failure of drawer to make check good
within certain period of time will serve as a presumption of guilt
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4. Forged Checka. Check signed by someone other than
drawer and without authorityb. If bank pays and drawer not negligent,
bank bears lossc. Drawer has 1 year to discover and report
to bank unauthorized signature or alteration on face of check
d. Drawer has 3 years to discover and report to bank any unauthorized endorsement on check
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5. Stop Paymenta. Bank has no right to cash checkb. Bank liable if check is cashedc. Oral stop payment good for 14 daysd. Written stop payment effective for 6
monthse. Holder in due coursef. Upon death, bank can cash checks for 10
days for those written prior to death
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6. Balancing Checkbooka. Should be done as soon as possible after
receiving statementb. Balance after writing checksc. Subtract checks written from balanced. Add deposits to balance
7. Outstanding Checka. Has not cleared the bankb. Must be known in order to reconcile
statementc. Find by comparing the bank statement
with the checkbook register
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8. Reconciling a Checkbooka. Makes sure the bank’s records agree with
your recordsb. Check for outstanding checks and depositsc. Check the checks, deposits, ATM activity
on the bank statement to make sure that your records are correct
d. Make adjustments to the bank statement and your records to ensure that you and the bank have the same amount of money
e. Reconcile every statement when received
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Competitive Banking ActCompetitive Banking ActFunds from the following must be available on day after
deposit– Checks drawn on US Treasury, State, or Local
Government– Bank Drafts– Cashier’s Check– Postal Money Order
Funds from these must be available within 3 business days following deposit– Checks drawn on banks within same district
Funds from checks drawn on banks in different districts must be available within 7 days
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Electronic Funds TransferElectronic Funds TransferEFT – Banking method in which
computers and electronic technology are used as a substitute for checks and other paper forms of banking
Electronic Funds Transfer Act Provides– Automated Teller Machines (ATM’S)– Pay-By-Phone Systems– Direct Deposit or Withdrawals– Point-of-Sale Transfers– Automatic Deposits and Payments
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Federal Laws Regulating Federal Laws Regulating EFTEFT
• No right to stop payment• Must receive a receipt each time you use ATM• Periodic statement must be issued• 60 days from date a problem or error appears to
notify bank• Banks have 10 days to investigate• Disputed funds, if returned, must be deposited to
your account within 45 days• Must notify bank it card is lost or stolen
– Will lose no more than $50 if reported in 2 days– If more than 2 days notification, you can lose
$500 or more