Unit 13 Flashcards
Define Securities, state the legal regime, the Economic Functions and characteristics
documents, with different content and characteristics that have common characters;
the incorporation of a right to the document so that the holder can demand compliance with the obligations arising from the right to the debtor
Legal Regime –> no legislation of its own or a legal definition
Functions:
-Facilitate the transmission of credit/right
-Facilitate the exercise (eliminate transaction costs and provide legal certainty)
CHARACTERISTICS:
1. Legitimation by possession
-faculty to demand fullfilment by possession
-creditor may demand payment upon presentation of the document
-debtor is released by paying who presents the title (not necessary to check if the owner)
-Limit of good faith
- Literally
-contents, limits and modalities of the right that can be exercised are STRICTLY LIMITED to what appears in the document
Describe what a bill of exchange is
security that incorporates an unconditional order, given by the issuer (drawer), to another person (drawee) to pay a third party (Holder), at the place and time indicated in the doc
Drawer–>Drawee–>Holder
Describe the Double Functionality of the Bill of exchange
in a commercial operation; means of payment (“trade effects” , the cause is a commercial contract)
allows financing through discount operations
SHORT-TERM CREDIT INSTRUMENT
Describe the Personal Elements of the Bill of exchange
Deliverer (drawer) :
issues bill of exchange, so it gives the payment order to the drawee
Recipient (drawee):
will make the payment when the due date arrives. IF ACCEPTS THE BILL THEN HE WILL BECOME THE EXCHANGE OBLIGOR (acceptor)
Taker (holder):
the person to whom the payment of the anmount indicated in the letter will be made
Define Endorsement (Bill of exchange)
The statement (contained in the Bill ) that allows the holder to transmit the Bill of Exchange to a new holder, who acquired all the rights contained therein
Describe the Acceptance of the Bill of Exchange
unconditional declaration of the Drawee by which is obliged to make the payment ordered by the drawer at maturity
By Acceptance, the drawee becomes the principal and direct exchange obligor ACCEPTOR
When and where?
it may presented fro acceptance at any time between issuance and expiration
Consequences of non-acceptance:
-the drawee is not obligated to pay
-is is presumed that the drawee will not face the payment
(therefore the holder is allowed to demand advance payment (before maturitty) from those responsible.
Describe Exchange Actions
DIRECT ACTION:
-against the acceptor or its guarantors
-only for non-payment
EXCHANGE ACTION OF REIMBURSEMENT:
-against any obligor
-for:
-non-payment
-non-acceptance
Describe the difference between BILL OF EXCHANGE and PROMISSORY NOTE
-Promissory note is a promise to pay (not an unconditional order)
-there are not 3 subjects but 2: the signatory and the holder
Define a check
document by which a drawer gives an unconditional payment oder to a bank, so that is pays, AT SIGHT, a certain amount in favor of the holder.
-USED FOR PAYMENTS NOT FOR CREDITS
-Drawee will always be the bank
-the document will always be “on sight”
-The drawee (the bank) will not accept it
Define a Transfer and what is is conditioned to
the transfer ordering client (ordering party) authorizes the bank to deduct the amount of the Transfer from its account to the account of the beneficiary
(as a general rule: it is liked to a bank current account contract)
CONDITIONED TO:
-identity verification
-availability of funds
Define Credit Card
Payment instrument by which the card issuer (bank entity) will satisfy the debt contracted bythe cardholder (user) with the establishment.
What are the differences between a Credit Card and a Debit Card?
- In the case of debit cards , payment is made with an immediate charge to the cardholder’sdeposit.
- In the case of credit cards , the payment will be made by the issuing entity and the holdermust repay it within the agreed period (normally one month. If it is longer, it will entail thepayment of interest)
