3. for the purpose of taking care of transactions in- (a) Foreign shipment of goods, (b) Shipment within United States, provided bill is accompanied by shipping documents, or (c) Storage within United States of readily marketable goods, provided acceptor is secured by proper receipt, or (d) Storage within United States of goods ac- Or the bill must be drawn by a foreign bank or § 212. Rules for Discount of Trade Acceptances Federal reserve banks may purchase trade acceptances under the following rules prescribed by the Federal Reserve Board: The bill must have arisen out of an actual commercial transaction, domestic or foreign; that is, it must be a bill which has been issued or drawn for agricultural, industrial, or commercial purposes or the proceeds of which have been used or are to be used for the purpose of producing, purchasing, carrying or marketing goods in one or more of the steps of the process of production, manufacture or distribution. It must have a maturity at time of purchase of not more than ninety days, exclusive of days of grace. The word "goods" has been construed as meaning goods, wares, merchandise and all agricultural products including live stock. § 213. The Drawee The drawee is not liable unless and until he accepts the bill. A bill may be addressed to two or more drawees, but not in the alternative, or in succession. Where drawer and drawee are the same person, or the drawee is fictitious, or where the instrument is ambiguous, the holder may consider the instrument either a promissory note or a bill of exchange at his option. § 214. Presentment for Acceptance Presentment for acceptance must be made: § 143.-1. Where the bill is payable after sight or in any other case where presentment for acceptance is necessary in order to fix the maturity of the instrument; or 2. Where the bill expressly stipulates that it shall be presented for acceptance; or 3. Where the bill is drawn payable elsewhere than at the residence or the place of business of the drawee. In no other case is presentment for acceptance necessary in order to render any party to the bill liable. Presentment for acceptance follows the general rules given for presentment for payment. (See Chapter XXXI.) § 215. Protest for Non-Acceptance A foreign bill appearing on its face to be such must be protested on the day of its dishonor by non-acceptance, if the owner desires to hold the drawer and indorsers. § 153. The protest must be annexed to the bill, or must contain a copy thereof, and must be under the hand and seal of the notary making it, and must specify: I. The time and place of presentment; 2. The fact that presentment was made and the manner thereof; 3. The cause or reason for protesting the bill; 4. The demand made and the answer given, if any, or the fact that the drawee or acceptor could not be found. § 154.-Protest may be made by: I. A notary public; or By any respectable resident of the place where the bill is dishonored, in the presence of two or more creditable § 157.-A bill which has been protested for non-acceptance may be subsequently protested for non-payment. Acceptance for Honor. An outside party may accept or pay a bill of exchange to save the credit of the drawee. In such case the acceptor makes himself liable, and if he must pay the bill, he has a right to be reimbursed by the person who should have paid it. A bill payable in a foreign country would be protested according to the law of that country, and not according to the law of the place where the bill was made. § 177.-Where a bill is drawn in a set, each part of the set being numbered and containing a reference to the other parts, the whole of the parts constitute one bill. In such a case, the acceptance should be written on one of the sets and on one part only. If the drawee accepts more than one part, he may be held liable on each part as if it were a separate bill. Usually, "where any one part of a bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged." When the acceptor of a bill drawn in a set pays it without requiring the part bearing his acceptance to be delivered up to him, and the part at maturity is outstanding in the hands of a holder in due course, he is liable to the holder thereon. REVIEW QUESTIONS 1. What is a bill of exchange? An inland bill? A foreign bill? An acceptance? A draft? 2. What is a general acceptance? A qualified acceptance? What is the form of acceptance? Its effect? 3. What is meant by "dollar acceptances"? Why is the term significant? 4. What is a "bankers' acceptance" as defined by the Federal Reserve Board? What is necessary to make a bankers' acceptance eligible for discount at a federal reserve bank? What are domestic bank acceptances? 5. 6. What are trade acceptances? What are their functions? What is necessary to make a trade acceptance eligible for discount at a federal reserve bank? 7. When is presentment for acceptance of a bill of exchange necessary? What is the effect if such a bill is not presented? 8. What must protest of a foreign bill of exchange specify in order to hold drawer and indorsers? Who can protest a bill? Must a bill payable in a foreign city be protested by the law of the place where it is payable or by our Negotiable Instruments Law? 9. When bills are drawn in a set, what is the duty of the acceptor? When must bills of exchange be presented for acceptance? II. What is the rule as to protest of foreign bills of exchange? 10. CHAPTER XXXVI BANK CHECKS § 217. Definition A check may be defined as an unconditional order on a bank or a banker to pay on demand a specified sum to a person named or to his order, or to the bearer. § 185.-A check is a bill of exchange drawn on a bank, payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on demand apply to a check. § 218. Checks as Evidence of Payment At the present time bank checks are used extensively as a substitute for cash payments. Few business men pay bills except by check. If actual money had to be constantly in transfer from one person to another, it would limit the amount of business that could be done at one time as the volume of cash in circulation is not adequate. The use of checks is an elastic medium of exchange that meets any possible demand of modern business. The use of checks for the payment of debts affords the very best possible evidence of the fact of payment. A check given to pay a debt can only be cashed by the indorsement of the recipient, and his indorsement is the best evidence that he received the check and collected the money. This important function has been amplified in modern accounting by the use of voucher checks. A voucher check contains a clear statement of the exact obligation that the check is intended to |