Accomodation bill & Trade bill

         Trade Bill                                                    Accommodation Bill

1	Trade bills are drawn for trade purposes.	1	Accommodation bills are drawn and accepted for financial assistance
2   3	These are drawn against proper consideration. These bills are proof of debt	2   3	These are drawn in absence of any consideration These are not a proof of debt
4	If discounted full sum retains with holder of the bill	4	If discounted the amount may be divided between drawer and acceptor in pre-
5	For obtaining the debt from drawee, drawer	5	determined ratio. Legal action cannot be resorted for recovery
	can resort to legal action.		of amount against these bills by the immediate parties.

Cheque & Bill of Exchange

 

Cheque	Bill of Exchange
01. Cheque can only be drawn on bank.   02. A cheque is payable on demand.   03. There is no question of acceptance.   04. Bankers get statutory protection in case of crossed cheques. 05. A cheque can not be drawn in sets. 06. The drawer has right to countermand.	01. Bill of Exchange is drawn on any person, firm, company or public including a bank. 02. 3 (three) days of grace are allowed to the drawee. 03. A   bill   of   exchange   payable   after   sight requires acceptance. 04. Bankers do not get any protection in case of crossed bill of exchange. 05. A bill of exchange may be drawn in sets. 06. The drawer has no right to countermand.

Pledge & Hypothication

Pledge

01. Pledge created only floating assets

02. Possession of the goods held at Bank.

03. It is easy for the bank to dispose off the goods because goods are held at Bank.

04. For any damage bank will be liable.

05. For auction of goods, court order required.

Hypothecation

01.   Hypothecation created on fixed/floating assets.

02.   Possession of the goods held at the party.

03.   It is not easy for the bank to dispose off the goods because goods are held at party.

04.   For any damage party will be liable.

05.   For auction sale of goods, court order is not required.

Holder for value & Holder in due course

For value

One who has given a legal consideration for a negotiable instrument is a holder for value. The holder of a

negotiable note taken as collateral security for a preexisting debt is a holder for value in due course of business. Similarly, an endorsee of a negotiable note taken as collateral security for a preexisting debt, there being no extension of time of payment or other new consideration except such as may be deemed to arise from the acceptance of the paper, is a holder for value.

Due course

Legal term for an  original or any subsequent  holder of a  negotiable instrument (check,  draft,  note, etc.) who

has accepted it in  good-faith and has exchanged something valuable for it. For example, anyone who accepts a  third-party check is a holder in due course. He or she has certain  legal rights, and is presumed to be unaware that (if such were the case) the  instrument was at any time  overdue, dishonored when presented for  payment, had any claims against it, or the  party required to  pay it has  valid reason for not doing so. Also called protected holder.

Difference between Promissory Note & Bill of Exchange

Promissory Note

01. It is promise to pay.

02. There are two parties i.e. the Maker and the

Payee.

03. The liability of the maker is primary.

04. A promissory note is not drawn in sets.

05. There is no need to present it for acceptance.

06. A promissory note can not be made payable to the maker himself.

 

Bill of Exchange

01. It is an order to pay.

02. Primarily  there  are  3  (three)  parties,  i.e.

Drawer, the Drawee and Payee.

03. The    liability    of    the    maker/drawer    is secondary.

04. A bill of exchange may be drawn in sets.

05. A   bill   of   exchange   payable   after   sight requires acceptance.

06. A bill of exchange can be made payable to self. 

Core Capital & Supplementary Capital

Core Capital (Tier-I)

01. Paid-up Capital

02. Non-repayment share premium account

03. Statutory Reserve

04. General Reserve

05. Retained Earnings

06. Minority interest in Subsidiaries and

07. Non-Cumulative irredeemable Preference Shares

Supplementary Capital (Tier-II)

01. General Provision (1% of unclassified loans)

02. Assets Revaluation Reserves (Depreciation)

03. All other Preference Shares and

04. Perpetual Subordinated Debt

05. Exchange gain etc.

What do mean by Basel –I & II? Contract

 What is Contract :

An agreement enforceable by Law is a Contract.

 Essential elements necessary for the formation of a valid contract.

 1.   Offer and Acceptance

2.   Intention to create legal relations

3.   Lawful consideration

4.   Capacity of parties

5.   Free consent

6.   Lawful object

7.   Writing and registration

8.   Certainty

9.   Possibility of performance

10. Not expressly declared void

 

Kinds of Contract :

(01). Valid (02). Voidable (03) Void (04). Unenforceable (05). Illegal

What do mean by Basel –I & II?

Basel is town, situated in Switzerland, where two conferences were held under the supervision of

BIS (Bank for International Settlement) with its 12(twelve) member countries in 1996, for the first time, and in 2004, for the second time which are recognized as Basel-I and Basel-II respectively.

 

Basel-I            :          In this conference capital adequacy for a Bank was fixed at 8% which was re- fixed at 9% in Bangladesh in 2002.

 

Basel-II           :          A framework for Bank Companies was prepared on the basis of three pillars namely (1) Minimum Capital requirement, (2) Supervisory review process and (3) Market discipline. It was also concluded in the conference that three risks would have to be covered by banks as (1) Credit risk (2) Market risk and (3) operational risk.

 

What is a Company

 What is a Company :

The company is a legal person. It is created by law. All companies are legal person.

 

Company are three kinds :

01. Company limited by shares          -          number of share limited

02. Company limited by guarantee

03. Unlimited company

 

** Subsidiary company

** Govt. Company – Statutory company

 

Subsidiary Company : Whenever, one company forms another company and holds 51% share in that company that is called subsidiary company.

Holding Company : A company which owns 51% shares in another company that is called holding company.

How number of persons to establish a company :

 

	Minimum	Maximum
Public Limited Co.  Private Limited Co.  Partnership Co.	7 persons   2 persons 2 persons	Unlimited persons 50 persons 20 persons

Once a Bearer Instruments Always a Bearer Instrument

A bearer instruments means an instrument, the ownership in which can be transferred from one person to another by mere delivery of the instrument. The instrument can be made originally payable to the bearer or it may be made bearer subsequently by holder making a blank endorsement. The bearer character of the instrument will not be lost ever in those cases where a blank endorsement is followed by a full indorsement. The instrument continues to be transferable by mere delivery in all such cases. However, under Sction-50, bearer instrument can legally be changed to an order one by a restrictive endorsement. In such a case the relations between endorser and endorsee are substantially those of principal and agent. The endorsee gets a right to receive payment of the instrument and to sue and party to the instrument that the endorser could 

have sued, but has no power to transfer his right to any other person unless he is expressly authorized to do so.

Illustration: B signs the following endorsements on different negotiable instruments payable to bearer : (a)       Pay the contest to C only

(b)       Pay C for my use

(c)       Pay C or order for the account of B.

In all the above cases, C cannot further negotiate the instrument. This made it obligatory for the drawee or maker to examine all endorsements before making payment.

refuse to honor a customer cheque, dishonour of cheques, refuse payment of cheque

When may a banker refuse to honour a customer cheque :

01. When the balance to the credit of the customer is insufficient to meet the cheque.

02. When the funds are not properly applicable to the payment of a cheque.

03. After receiving the notice or information or death, the banker should stop payment of all cheques drawn against his account.

When Banks must refuse payment of cheque.

01. On customer countermanding payment

02. On receipt of a notice of customer death

03. On customer becoming insolvent

04. On receipt of a notice of the customer insanity

05. On receipt of Garnishee Order

06. On notice of Assignment

07. Trust account

08. Stolen cheques

Other reason for dishonour of cheques.

01. Post-dated

02. Short of fund in the account

03. Cheque presented after business hours

04. Joint account but cheque are not signed by joint account holders

05. The cheque is irregular and ambiguous

06. The cheque presented after 6 months from the date it bears

Apparent Tenor –  04 elements

01. Date of cheque,

02. Sum of cheque both word and figure

03. Name of payee,

04. Drawer signatures.