A negotiable instrument such as a cheque or promissory note represent rights of payment.
Promissory note
Is a document that provides a written promise by one party to pay another party a particular amount of money on a particular date.
Nemo dat rule
Negotiable instruments are not generally subject to the nemo dat rule which paves the way for commerce to operate. In other circumstances, nemo dat provides that a party without holding title cannot transfer title to a another party.
Negotiable instruments operate as either credit or payment function.
When negotiable instruments are used, there are a number of parties that come into play:
bearer
party in possession of negotiable instrument
drawer
The make of bill of exchange
drawee
The party or person who receives the bill of exchange
endorsee
This is the party to whom a negotiable instrument has been transferred via endorsement.
holder in due course
The party who ultimately acquires the negotiable instrument through negotiation in good faith.
maker
This is the party signs a negotiable instrument such as cheque or promissory note
payee
This is the party/person that receives the payment.
Drafting a promissory note
must:
- be written and signed
- state who the payee is
- state a monetary value
- include a ‘promise to pay’
- include a definite time of when the instrument is payable
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The language of negotiable instruments
When making suggestions to clients and colleagues:
I/we suggest that….
I am suggesting/advising that….
I/we recommend that…
‘Off the top of you head’ (from memory) what negotiable instruments are there and how do they operate?
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Legal English classes are provided by a UK qualified lawyer who is also a CELTA qualified teacher.
For legal English classes a minimum intermediate (B1) English fluency level is required. Some of the material is only suitable for more advanced students.
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We also teach general, business and conversational English.