22.1 1.1
Law for Business, 15e
by Ashcroft
Chapter 22:
Promissory Notes
and Drafts
Law for Business, 15e, by Ashcroft, © 2005 West Legal Studies in Business, a Division of Thomson Learning
22.2
Chapter 22
Objectives
 State the accountability of the maker
and distinguish among the different
types of notes.
 Identify two different kinds of drafts.
 Explain how drafts are accepted and
what admissions are made by
acceptance.
 Describe characteristics of a check.
22.3
Promissory Notes
 The
original parties to a promissory
note and the maker and the payee
 The
maker:
 Expressly
terms.
agrees to pay according to
 Warrants
that payee is competent to
transfer the instrument by
indorsement.
 Admits
the existence of the payee.
22.4
Types of Notes
Bonds
Coupon
Registered
Collateral
notes
Debentures
and certificates
of deposit
Real estate
mortgage
notes
22.5
Example of Note
PROMISSORY NOTE
(can be time note, demand note, collateral
note, or mortgage note)
March 20, 20xx
I, Maker, promise to pay Payee the
sum of $3000 due and payable in 30 days
at the rate of 8% per annum. Interest and
principal are to be payable in legal U.S.
tender.
________________
Signature of Maker
22.6
Drafts
types of drafts are time
drafts and sight drafts
 Two
A
trade acceptance is
considered a draft
 An
instrument should be
presented for payment
22.7
Checks
Certified checks
Bank drafts
Cashier’s checks
Voucher checks
Traveler’s checks
22.8
Example of Check
No. 533
Drawer
5409 Billionbux Avenue
Pittsburg, PA
20
Pay to the order of: Payee
Dollars
Drawee National Bank
Dallas, TX
For
Drawer Signature
22.9
Duties of the Bank
 Must
maintain secrecy regarding
information about customers.
 Must
compare the signature on
depositors’ checks with that of the
signature card.
22.10
Duties of the Bank
 Must
pay on demand a
depositor’s check to the extend
of depositor’s funds on account.
 Must
stop the payment of
checks upon request of the
drawer.
22.11 1.11
The End !
Any
questions?