1. Discuss the notions of negotiable instruments ?
Negotiable instruments are specific types of financial documents that can be transferred from one party to another in order to facilitate the exchange of goods or services. These instruments are considered legally binding and give the holder the right to claim payment from the issuer or another third party.
There are three main types of negotiable instruments:
1. Promissory notes: A promissory note is a written promise from one party to pay a certain amount of money to another party at a specified time. Promissory notes are commonly used in personal loans, real estate transactions, and business agreements.
2. Bills of exchange: A bill of exchange is a written order from one party to another, directing the second party to pay a specified amount of money to a third party. Bills of exchange are commonly used in international trade transactions.
3. Cheques: A cheque is a written order from an account holder to a bank, directing the bank to pay a specified amount of money to the recipient of the cheque. Cheques are commonly used for everyday transactions and payments.
Negotiable instruments have several key characteristics, including transferability, durability, and negotiability. These instruments are considered valuable assets and can be bought, sold, or traded in the same way as physical goods or services. Additionally, negotiable instruments are subject to specific legal requirements and regulations, which help to ensure their legitimacy and enforceability.
Overall, negotiable instruments play a crucial role in facilitating financial transactions and commerce by providing a secure and reliable means of transferring funds between parties.