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Bills of Exchange, Cheques & Promissory Notes :
1 Bills of Exchange, Cheques & Promissory Notes Theory, principle, concept And Operational significance
Objectives :
2 Objectives Theory and Principles Negotiable instruments. Definition and features of bill of exchange. Cheque, components, features and crossing To understand the components of cheques. Return cheques & BMC Difference between bills of exchange and cheques To define promissory notes.
Theory :
3 Theory Money as medium of exchange. Now FIAT BE, cheques, & Promissory notes as proxy for money: For ease of exchange Security in exchange Bill of Exchange Act 1949 derived from English law (Common Law, Tort, & Law of Equity)
Principles :
4 Principles Common Law’s “nemo dat quod non habet” (no one can give what he doesn’t possess). With negotiable instrument, the above common law principle may not apply. Thus, if you steal a RM500 bearer cheque and negotiates with an innocent party who takes it in good faith and for value, that innocent party acquires good title to the cheque.
Dictionary: What is good faith? :
5 Dictionary: What is good faith? A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not.
Slide 6:
6 Transferability – transferor transfers whatever title in the instrument he has to the transferee. If transferor has defective title (such as stolen cheque), he can only transfer the defective title. Transferee will obtain a defective title. Transferability is viewed from the angle of ‘transfer’. Transferring a bad title will result into the receiver acquiring a bad title.
Slide 7:
7 Negotiability – transferee acquires a better title to the instrument than that possessed by the transferor. Negotiate to obtain value. Depending on the case, transferee may acquire a good title, although the transferor transfers defective title. It’s from the angle of ‘acquiring.’
1 Bills of Exchange, Cheques & Promissory Notes Theory, principle, concept And Operational significance
Objectives :
2 Objectives Theory and Principles Negotiable instruments. Definition and features of bill of exchange. Cheque, components, features and crossing To understand the components of cheques. Return cheques & BMC Difference between bills of exchange and cheques To define promissory notes.
Theory :
3 Theory Money as medium of exchange. Now FIAT BE, cheques, & Promissory notes as proxy for money: For ease of exchange Security in exchange Bill of Exchange Act 1949 derived from English law (Common Law, Tort, & Law of Equity)
Principles :
4 Principles Common Law’s “nemo dat quod non habet” (no one can give what he doesn’t possess). With negotiable instrument, the above common law principle may not apply. Thus, if you steal a RM500 bearer cheque and negotiates with an innocent party who takes it in good faith and for value, that innocent party acquires good title to the cheque.
Dictionary: What is good faith? :
5 Dictionary: What is good faith? A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not.
Slide 6:
6 Transferability – transferor transfers whatever title in the instrument he has to the transferee. If transferor has defective title (such as stolen cheque), he can only transfer the defective title. Transferee will obtain a defective title. Transferability is viewed from the angle of ‘transfer’. Transferring a bad title will result into the receiver acquiring a bad title.
Slide 7:
7 Negotiability – transferee acquires a better title to the instrument than that possessed by the transferor. Negotiate to obtain value. Depending on the case, transferee may acquire a good title, although the transferor transfers defective title. It’s from the angle of ‘acquiring.’