Negotiable Instruments in Banking

Topics: Negotiable instrument, Promissory note, Bearer instrument Pages: 17 (5284 words) Published: April 20, 2013

Assignment On

Negotiable Instruments in Banking
Course Title: Introduction to Banking Course Code: FIN-305

Assigned To:
Mr. S.M. Athiqur Rahman Lecturer Dept. of Business Administration Leading University, Sylhet, Bangladesh.

Prepared By:
Md. Inzamam-Ul Haq Talukder ID. # 1101010342 Section: E 7th Semester (27th Batch) Leading University, Sylhet, Bangladesh


APRIL 21, 2013


This assignment paper has been prepared by myself which is the title “Negotiable Instruments in Banking” under the supervision of Mr. S.M. Athiqur Rahman, Lecturer in Dept. of Business Administration, Leading University, Sylhet, Bangladesh. The duplication of this paper is prohibited without the permission of Author.

Author Md. Inzamam-Ul Haq Talukder ID. # 1101010342 7th Semester (27th Batch) Leading University, Sylhet, Bangladesh


I would like to acknowledge the contributions of the individuals to the development of this assignment paper: Our class peer research group for the cooperation and camaraderie. I am also heartily thankful to my course teacher, Mr. S.M. Athiqur Rahman, Lecturer in Dept. of Business Administration, whose encouragement, guidance and support from the initial to the final level enabled me to develop an understanding of the subject. To my truly great friend Tanvir who has made available his support in a number of ways. Lastly, I offer my regards and blessings to all of those who supported us in any respect during the completion of the project.

Md. Inzamam-Ul Haq Talukder Dept. of Business Administration ID. # 1101010342



i. ii. iii. iv. v. vi. vii.


Contents Name

Page Number
1 2-4 5 - 16 17 - 18 19 - 20 21 – 22 23

First Chapter Second Chapter Third Chapter Fourth Chapter Fifth Chapter

Introduction General Context of the Study Data Collection and Limitation Result and Discussion Conclusion References


Negotiable instruments are mainly governed by state statutory law. Every state has adopted Article 3 of the Uniform Commercial Code (UCC), with some modifications, as the law governing negotiable instruments. The UCC defines a negotiable instrument as an unconditioned writing that promises or orders the payment of a fixed amount of money. Drafts and notes are the two categories of instruments. A draft is an instrument that orders a payment to be made. An example is a check. A note is an instrument that promises that a payment will be made. Certificates of deposit (CD's) are notes. Drafts and notes are commonly used in business transactions to finance the movement of goods and to secure and distribute loans. To be considered negotiable an instrument must meet the requirements stated in Article 3. Negotiable instruments do not include money, payment orders governed by article 4A (fund transfers) or to securities governed by Article 8 (investment securities). The rule of derivative title, which is applicable in most areas of the law, does not allow a property owner to transfer rights in a piece of property greater than his own. If an instrument is negotiable this rule is suspended. A good faith purchaser, who does not have any knowledge of a defect in the title or claims against it, takes title to the instrument free of any defects or claims. In relation to the suspension of the rule of derivative title, Article 3 provides for warranties to protect the parties in transactions involving negotiable instruments. Checks are negotiable instruments but are mainly covered by Article 4 of the UCC. Secured transactions may contain negotiable instruments but are predominantly covered by Article 9 of the UCC. If there is a conflict between the Articles of the UCC both Article 4 and 9 govern over Article 3.


First chapter: Introduction


1.1. Statement of The Study The word negotiable means ‘transferable by delivery’ and the word ‘instruments’ means a written...
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