LAW 603 Lecture Notes - Cheque, Negotiable Instrument, Promissory Note
30 Nov 2013
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Document Summary
Negotiable instrument a contract that contains an obligation to pay money; a compromise between a simple contract and money. 3 important differences between negotiable instruments and contracts: consideration: cheque is only enforceable if it is supported by consideration. Something of value must be given in exchange for it: privity: anyone who holds that cheque can sue on it even if not originally a party, assignment: can be assigned to a stranger. 3 types of contract in the bills of exchange acts: cheques, bills of exchange, promissory notes. Requirements that must be met in order for the act to apply. Created when a person orders a bank to pay a specific amount of money to someone. Drawer: the person who draws or creates the cheque. Drawee: the bank that is ordered to pay the money. Payee: the person who is entitled to receive the money from the bank. Drawer -> payee relationship: 2 contracts.
