Settlements using negotiable instruments

[Tomcat]

In the system of non-cash settlements of economically developed countries, the so-called negotiable payment instruments are widely used. Unlike payment orders and payment requests, they are not within the closed framework of interbank settlements, but go into inter-business turnover. They can be the subject of purchase and sale, they can play the role of collateral, they can freely move from one economic agent to another. Despite the fact that negotiable instruments can be accepted as payment for goods and services or in repayment of debt, they are not money, i.e. legal tender that must be accepted by all participants in the payment turnover. Negotiable instruments include highly liquid securities, for example, promissory notes and bills of exchange, checks, certificates of deposit, warrants, etc.

The rules for the compilation and transfer of negotiable instruments by one economic entity to another are regulated by law. In the USA, it is the Unified Commercial Code (hereinafter referred to as the EKC), adopted in 1953. Article 3-1 of the EKC defines four main features of negotiable instruments:

• - it is a written document signed by the person who issued it;
• - it contains an unconditional order or promise to pay a certain amount of money;
• - the payment is made in favor of the person indicated in the document or the bearer;
• - payment is made on demand or on a specific date.

According to the EKC, only a document that meets all four conditions is considered a negotiable instrument. In fact, by mutual agreement, the parties can change or ignore some of the conditions reflected in the EKC, but in this case the rules of the Code cannot be applied when resolving the dispute. Next, we will consider the main types of negotiable instruments - a bill and a check.