Professional Documents
Culture Documents
JW Johnson - Promissory Notes, Cheques and Drafts
JW Johnson - Promissory Notes, Cheques and Drafts
RAFTS. AND
CHEQUES
f^rww.
l^^l^^yi
Cy^i^^"^^^
^TPromissory
ftND BILLS
iMotes,
OF eXCHftNGe.
KNOW
WHAT
J.
W. JOHNSON,
F.
O.A.,
Author of "Johnson's Joint Stock Company Book-Keeping," Joint Author of "The Canadian Accountant," Principal Ontario Business College, Belleville, and First
Vice-President
Chartered
Ontario.
BELLEVILLE
Printed for Ontario Business College,
iS93-
PREFACE.
In the Oniario Business College, Belleville, the Author has for the
last
seven-
teen years been lecturing upon and teaching such subjects as this book treats of
Man
has been
for
twenty-seven years
them.
is
one of a
its
Papers.
The faithful
study of
of the lectures and blackboard work in the class room, and the practical work in
the College, will prove helpful in doing business.
its
first
was published
in
The
fifth
since
Dominion
of
Exchange Act,
1S90,''
jjassing of the
J.
W. JOHNSON.
One Thousand
0/ Agri-
Department
Introductory.
It is desirable that
a business
man
application to
commerce,
it
and more
especially in
relation to Bills
and Notes.
Ignorance of
or defending
an
COMMON LAW
is
come
to us by tradition,
custom, and
common-sense
principles of justice.
STATUTE
is
LAW
made from time
to time
by
common
how
mon
When
connection with them, the courts simply required that the general
usage
common
is
law.
These
decisions, again, as
cisions.
known
as the
The
the
of the Law-merchant
is
well
illustrated in
transfer of
Notes and
Bills
By
the rule
in
of the ancient
common
law,
money
in the future.
transferring Bills of
to hand, or right
common
law,
but to some extent the Statute of Frauds (explained further on) was
surmounted.
Another
illustration of the
Law-merchant
is
of Bills and Notes from the ordinary rules that apply to contracts and the law of evidence.
Contracts.
Promissory Notes and
of contracts.
mercial
life
Bills of
They
enter
daily
com-
When men
deed of
such
usually,
as
those
in-
they
and
and guid-
bills,
ordinary
This work in
its
community
basis practical
5
"While
it is
desirable, as has
reliable soliciBills
tor should
and Notes,
There are
Two Kinds
of Contracts.
known
as Simple
and
Specialty contracts.
be
in writing, but
A
party
consideration, that
to say,
other,
essential
in every contract
not
under
When
must
in general
be proved, but
to be in
The
(1676) which
in force in
Canada
(as all
is.
English
unless
common
it
law,
and
all
of
it
to sign for
him.
I.
Where
man
answer
for his
default.
For example, a
for
man
store
to
and
the
be responsible
If,
John Smith
amount of $50.00."
in
not cause the guarantor to put the agreement in writing, even though
you
would have no
claim,
legal
hold
and
that
might not be
any value.
2.
To
$40.00, the contract must be in writing, unless there has been a part
of the purchase
it
it,
of the goods,
Where an
estate.
his
own
4.
When
an agreement
if
is
made which
is
a year.
For instance,
for
him
as a
book-keeper
less
it
was made
in-
writing, but
under
lease for
more than
three years
three years
it
may be made
in writing
must be
and under
What
A
that
seal in this case
Constitutes a Seal.
or distinctive mark,
and attach
to the instrument.
Who
Any person
mind,
is
are Competent to
of either sex
Make a
A
Contract.
who
is
person
who
is
under the
in
Many
woman
(a
is
of age at eighteen.
This
is
a mistake.
A mmor
or her
own
account, but
would be competent
for a
minor
to con-
life.
company
and
to
or muni-
cipality)
its
charter,
be binding
re-
bills
of
exchange,
its
An
agent
may
authority, which
under
seal,
called a
Power of Attorney.
and binding contract may be made by correspondence or
All that
it.
valid
telegram.
is
required
is
an
offer
and an unconditional
ac-
ceptance of
and those
you
receive in
When
Simple contracts
years from the date of maturity, or from the date of the last
payment
affect-
last written
acknowledgment; contracts
seal,
twenty years.
For instance,
be outlawed
(i) a
made April
if,
or no written
(2)
which no written
that time,
would be released
covenants for
for
(3)
The
personal
twenty
Canadian Legislation,
In the year
of
Canada enacted a
Statute
legis-
known
lation
as the "Bills of
Exchange
your
you
find that
it
will
be
to
you
have
this
another form, so
him
to accept
some one
whom you
draw the
draft
Your object
three-fold:
It is in
itself
1st.
tion (unless the signature be challenged) nor proof of the consideration given for
it,
2nd. It fixes a definite time, and usually a stated place, for the pay-
it
falls
The
pay
it,
the
holder has
simjjly to
present
it
there
to both parties.
after indorsing
it,
you may
This
is
called dis-
medium
of the
capital,
bill
or note as
the simple
it
has to
run.
promissory note
to another,
is
one person
demand
^
to,
or
order
of,
draft:
(a) At
(b)
sif^ht,
On
is
which
certain
uncertain.
An
a
bill
is
not
defect.
If a
note or draft
is
may
insert
therem
promissory note
is
Parties to a Note.
gives a
note
is
or
;
the person in
his
whose favor
is
drawn
is
he signs
name upon
guaranteeing
to
it,
whom
he transfers
the latter
is
these, or
anyone
in possession of a note,
may be
Forms
Notes may be made
(r)
of Notes.
ment
The
first is
made payable
may
it all
and
exist beis
parties; the
second
10
transferred by the indorsement of the holder completed by delivery,
liable for
is is
payment
in
maker
transferred
by delivery, just
in a
as a bank note
Where,
wrongly desigbill
nated, or his
name
is
mis-spelt,
fit,
as therein
described, adding,
if
he thinks
note
may
is
due.
When
taken before
not affected
\>y
When
all
A
$100.00
Non-Negotiable Note.
Belleville, October 26, 1893.
Three months
at the
after date I
promise to pay
to
Bank
o(
value received.
John Smith.
A
$387.80
26, 1893.
sum
of Three
John Smith,
A
$50.00
26, 1893.
my
office in
John Smith.
11
A Note Payable on
$35.00
Demand.
Oct. 26, 1893.
Montreal,
for value received, I
On demand
B. Robinson,
tlie
sum
of Thirty-Five Dollars.
John Smith.
Where
a note payable on
indorsed,
it
must be
is
discharged.
In determining what
had
to
the nature of the instrument, the usage of trade, and the facts of the
particular case.
A
$75.00
Six
months
after
S.
date
we
jointly
and
the order of
office of the
G. Beatty the
sum
Dominion Bank
Where
a note runs
it is
and
is
signed by two or
more persons,
deemed
The
the
not necessary on
there be
no indorser on
it.
party
The
A
reads,
"
Joint Note
of "we jointly and
severally."'
we
jointly" instead
When
for the
make
is
all
the action.
The
joint
and
several
the
better form
individually.
12
in
a Negotiable Note.
who acquired
the
instrument
ity,
in
due
course, that
is
to say, in
good
faith,
before matur-
hereby assign
"
all
my
right, title
and
trans-
fer to
the assignee
Ellis
possesses,
for
example,
Henry
for
$300.
Wilit
son assigned
to Alex.
Thomson.
After
it
to Ellis in the
sum
of $100,
and
this
amount
Ellis
when
the assignee,
Thomson, presents
for
payment.
Had
it
been a
to
full
amount,
This example
note.
An Accommodation Note
is
his
name
maker
it.
It flatters
some men's
if
vanity to be
they would
put their
name on
liability
and
in a
moment
of weakness they
assume a
freed
that
from by paying.
To
money upon
a note
is
assuming no
tracted.
Form
of an
Accommodation Note.
to indorse
13
to give to a creditor
who
is
pressing him
for security
for
a debt.
Such a note
is
may be
held as
first
maker.
$150.00
Three months
after
date
Bank
Commerce
here,
the
sum of One
Brown.
Hundred and
To
William
be indorsed on back
E.
John Smith.
A
Where
was holder of it may apply
Lost Note.
before
it is
who
him
same
against
shall
bill
be found again.
on request
may be compelled
do
so.
In any
that
action or proceeding
upon a
bill,
may order
provided an indemnity
in question.
Discrepancy Between
Where
and there
words
is
Words and
Figures.
the
is
sum payable
is
sum denoted by
the
the
amount payable.
Not
Invalidated.
it
note
is
is
is
it
dated, or that
That
;
need
was made
While such
a note
would
u
not be void,
a
it
is
well to
keep
in
mind
made on
Sunday would be
void.
A
A
Holder
is
in
Die Course.
who has taken
it,
a holder
a note or
bill,
namely
it
before
it
such was
in
good
faith
and
for value,
and
was negotiated
person
to
who
negotiated
The
when
title
of a person
who
negotiates an instrument
bill,
is
defective
when he
negotiates
it
in
breach of
faith,
or under
A
to in
who
derives his
title
to a bill or
who
is
any fraud or
illegality affecting
it,
has
all
due course
and
Note Given
Every
bill
for
a Patent Right.
in part, of the
est,
purchase
money
and
legibly across
before the
same
is
issued, the
words "given
and
without such words thereon such instrument and any renewal thereof
shall
be void, except
in the
hands of a holder
in
15
The
the words aforesaid so printed or written thereon, shall take the same
subject to any defence or
set-off"
in respect of the
issues,
by indorsement or deliv-
any such instrument not having the words "given for a patent
manner
guilty of a
misdemeanor, and
liable to
imprisonment or
fine.
Altering a Note.
Where
assent of
a note,
all
bill
or acceptance
it
is
parties liable,
is
who
sequent indorsers.
Provided, that where a
alteration
is
bill
had not
original
according to
its
tenor.
The
following alterations
sum
bill
and where a
erally,
made payable
genr.r
maker's assent.
on which the
It is
is
six
important,
when drawing
a note, that
is
to
.\fter
words or words
16
to the s.ime effect, are
at the
higher rate
till
There
is
no usury law
in this country,
nor
is it
should be.
to the
Money,
like
will
bring for
its
use
owner
is
content with a
fair
who
will
profulfil-
mise
ment.
Days of Grace.
The custom among merchants
has established the practice, which
all
promis-
No
time
bill is legally
due
have expired.
In prethat ot
own
payment
this fact in
bill
book
To
not
fall
due
till
January 29th.
fall
A
till
due
January 27lh.
Power
It is
of Attorney.
managing accountants the
draw cheques, and genis
customary
to
power
draw
bills,
drafts,
This authority
conveyed
It
it
called a
Power
of Attorney.
may
to a
special
;
number
of acts
in carrying
on
is
its
The
usual
way
for a
person
is,
who
to sign business
papers
his
own
17
underneath, with the words "per pro" or
thus
:
letters
it,
J. C.
per pro
The
only
bound by
such signature
if
Where
bill
he signs
for
or on
is
not per-
describing
him
as
an agent, or as
a representative character,
liability.
When
A
ity,
bill
or note
becomes outlawed
date of matur-
payment on account,
is,
written acknowledgment.
That
recover upon
it
if
the maker,
on being sued,
up
in
defence the
the reign of
King James
I.,
parties to
commence
tries
In
all
civilized
coun-
some period
An
instru-
ment approaching the legal, though not the moral, end of its existence
to
its life
renewed, by the
in writ-
an acknowledgment
maker
of the note.
Indorsements.
The
act of writing the
name upon
is
makes
payment
in the
and
it
makes an instrument
18
The forms
of indorsement
commonly
as
John Jones
an example)
Indorsement
which has the
indorsed
in
in Blank, Specifying
John Jones,
no Indorsee, as
bill
effect
just described.
When
a note or
has been
may
convert the
bhnk indorsement
himself or
bill
some
other person.
Indorsement
in full or Special
the Indorsee to
Pay
Whose
to the order of
John Jones,
which makes the indorser responsible and the instrument negotiable
only after
it
Qualified Indorsement.
Without recourse
to
me,
John Jones,
which relieves the indorser of responsibility, and simply makes the
instrument transferable.
Restrictive Indorsement.
Pay
to Richard
only
to
that
example,
Jones or
19
bearer, because,
if
drawn
to order,
On
a note payable to order that has not been transferred, and conse-
quently not indorsed, you should have the payee indicate that he had
held
it,
it.
Have him
indorse
it
and
away
like receipts.
Liability.
an indorser or several
If
he
should be obliged to sue and should recover from the maker, that
would discharge
indorser, that
all
the indorsers
first
in-
that preceded
to
first
become an
name
last.
Guarantee.
You may
Your
" I
hereby
name
re-
beyond
that of an indorser,
Where
1.
Where
a promissory note
it
in the
body of
it
made payable
at a
particular place,
must be presented
for
payment
at that place.
But
the maker
is
mature-.
If
no place of payment
is
speci-
body of the
render
t!ie
payment
is
not necessary
in order to
2.
maker
liable.
Presentment
for
payment
;
is
20
3-
Where
a note
is
in the
body of
is
it
made payable
at
a particular
place,
presentment
at
that place
])lace
when a
of payment
indicated by way of
sufficient to
memorandum
render
if suffi-
maker elsewhere,
of the
first
in
The
maker's
liability is absolute,
is
conditional on
non-payment.
note that
may be regarded
is
as perfectly
reliable,
is
financially sound,
if
may,
after
it
Having presented
at the place
named by
the holder
its
bound
order to
The
notary
will
make
he
demand
for the
"No Funds,"
demand
;
will write
will,
and
protest to the
known address
nearest post office to the place at which the note was payable.
protest will cost the holder, in the Province of Ontario,
fifty
The
cents,
twenty-five cents
as legal interest from the date of maturity. protest with the note
in
The production
of the
upon which
to sue
an indorser.
In this Province, notaries are appointed without special examinations by the Ontario
ever.
Government.
They
a distinct profession,
as
it is
Irance.
21
When
protested,
a dishonored note or
bill
is
authorized or required to be
and the
bill
may
shall
and give
all
necessary
notices,
thereto.
and
in respect
Waiving
By
waiving
protest an
Protest.
it
indorser renders
This
usually done,
:
if
be-
John Jones.
If at maturity
:
" I
"
Protest
the indorser
date of maturity.
There
there
is
is
no necessity
to protest
a dishonored note
for six
upon which
years after
maturity.
Noting.
When
time,
it
a
is
bill
or note
is
sufficient that
extended
at
Paying or Making Partial Payments upon Notes. When you pay a note or renew one, be sure that you get it back,
and,
if it
it,
by writing "cancelled"
valueless.
it,
If the
payee should
it,
indorse
or place
it,
some
upon
it
that he
had been
it.
in possession of
necessary.
The importance
made
very apparent to
me
by a circumstance
tliat
came under my
them
observation recently.
A man
payment
to t!:e
man
from
whom
for
it
and
gave a receipt.
His excuse
was inconvenient
at
to
go
an early day.
In less
than a week he " skipped out " without returning the notes, and of
course the maker had to pay the amount to the bank, as well as the
notarial charges incurred in protesting them.
Retail dealers,
who
have
in
banks
of a wholesale concern,
to
pay
them.
When
is
making
partial
obligation to pay
seal
is
termed
in
business by the
holder a
Payable.
Bill
by the maker or
in the
acceptor a
Bill
and
Bills
Payable account.
Bills
Receivable account
is
made
Dr.
when
when they
The
difference, or balance,
between the
two sides should correspond with the notes on hand, and the account
closes,
by balance, unless
it
all
of,
when,
of course,
Bills
will
Payable account
credited
when you
or,
draft,
word
is,
retire
these obligations.
*
The
difference
between the
No
business
man
Accounts with
Bills
should omit to keep a Bill Book in addition to the Ledger Receivable and Bills Payable.
23
correspond with the obligations outstanding, and the account closes,
to balance, unless
all
like Bills
will
be ruled and
The mere
novice in book-keeping
will
understand and be
able to deal with these accounts when, in the case of Bills Receivable,
of,
when they
But
in the
event of
be experienced.
shall
take an exam])le or
Bills Receivable,
and
his
It
stood
at
it
the
at
disposed of
I
it
by discounting
the
made
the
bank debtor
for the
Bills
My
customer asks
for a
and
consent.
is
The renewal
the
for three
it
is
to
be added to
new
it
note,
making
to
send
back
new
one.
cheque given
to
Bills
Receivable
To Bank
This entry places the note where
it
$300 $3
was before
it
was dicounted,
and
is
be
made by an
when
when
the
maker
to
was considered
Loss
financially worthless,
it
would be charged
&
Gain.
$305 20
$300 00
5
:
20
The
Bills
Payable Dr
"
Bills
$300 00
Interest
520
Payable
To
$305 20
24
Partial Renewals.
Brown renews for you half the amount of a note for $500.00 due You pay $250 cash, and to-day. give a new note for half the amount of the old one and interest
i.
Your
entry
Bills
Payable
cash
Bills
Dr..
$ c. 500 00
3
Interest
j
"
50
To
"
2.
$250 00
Payable
:
25350
on renewal, $3.50.
His entry
Bills
Cash
'
To
Brown renews tor you half the amonnt of a note for $600.00,
due
l)ein<4
3.
Receivable
500 00
3
Interest
Your
*'
entry
Bills
to-day.
You
pay
$303.00,
Interest
3 00
To Cash
"
4.
interest
give
Bills
Payable
:
303 CO 300 00
new note
amount of
His entry
Bills
Cash
To
"
Receivable
303 00 600 00
3 00
Interest
is
would have
i
to
be
as
through
:
it.
would be
follows
CASH CREDIT.
By
Bills
Payable.
For
92,
part
payment on No.
Bill
renewed
as per Journal
and
JOURNAL.
Bills
Book.
250 00
Interest
3 50
To
Bills
Payable
253 50
"^Lien Notes.
Lien
notes
are
now
frequently
given
by
people
purchasing
A Common Form
to
of Lien Note.
189
,
Belleville,
I promise 1S9 Co., (Li.mited), or order at their Office, in Belleville, for value received Dollars, with interest at Seven per cent., and at the rate of Ten per cent, interest after date of maturity. I further agree to furnish security satisfactory to you at any time if required. If I fail to furnish such security when demanded, or should I sell or otherwise dispose of the land or personal property I am now possessed of, then this note is to become due and payable forthwith and you may retake possession of the article for which this note is given without process of law, and sell it by public or private sale, but the taking
pay
selling of said article shall not relieve me of my liability for any balance of the purchase price still unpaid after such sale. The title and right to the possession of the property for which this note is given shall remain vested in The G. & J. Brown Man'fg. Co., (Limited), until this note or any obligation given therefor is paid.
and
this
this note.
Lot
Con
Township
P.
J3
O. Address
Witness
-Ji
^ < An Act
chattels
It
c S 3 tC
came
on the
first
of January, 18S9.
is
provides
such
valid
as
was given,
it
demand and
is
entitled
claiming ownership,
full
;
and
if
drawn
26
will
be
The
to
inquiry
may be made by
sent,
letter,
giving the
will
and
it
be
sufficient if
be made by
'
may
full
If the
sum than
when
known
or sent by registered letter seven days before said five days will elapse, addressed to
the time
when
the
the last
known
post-office
left
instrument,
The
manufacturer,
bailor
or
vendor
may
file
copy of the
in
at the
purchase
some of the
I.
o. u.
by a borrower to a lender as for
Montreal, April 28th, 1893.
Is a
memorandum
:
of a debt given
example
Mr. A.
B.,
I.
O. U.
Ten
Dollars.
C. D.
It
is
not a promissory
note,
but
is
valuable evidence
of the
2T
bill
of exchange
is
an unconditional order
in writing,
it,
addressed
requiring
at a fixed
whom
it is
sum
certain in
;
money
to,
or to the
order
of,
An
(a)
inland
bill
which
is,
or on the face of
it
purports to be,
(/')
drawn within
bill
is
Any
other
Nearly
differ,
all
that has
been said
they
A
is
note
is
a promise
to
pay,
with
the
debtor
a draft
an order to pay,
to the debtor.
parties to a draft
in
whose favor
is
drawn;
drawee, the
one on
whom
it is
drawn,
who becomes
same
the acceptor.
The
acceptor
same
position as the
maker of
a note,
and
position as the
bill,
first
indorser
of a note.
To
be held
for a
dishonored
later
to a
Notary Public to
such notice
is
be protested.
given
is
Any drawer
or indorser to
whom
not
discharged.
to
28
The
of exchange.
You
will
observe
:
that
three
parties
Robinson
&
Johnson,
Belleville, are
&
Son, Montreal,
who
amount
to
R. Miller, Son
Co., to
whom John
Lovell
:
&
Son are
Draft.
$500.00
Montreal, January
after sight,
8th, 1S93.
Ten days
the the
&
Co.,
sum
same
of Five
Hundred
and charge
to the account of
tJoHN LovLL
&
Son.
To
Robinson
&
Johnson,
''Payee.
fDrawer.
Drawee.
To make
the draft
it,
&
Johnson they
:
will
have to accept
which they
Belleville.
Robinson 6^ Johnson.
After which
it
is
called an acceptance.
Robinson
&
Johnson are
now
on a
of
in the
same
position as
if
they had
made
a promissory note,
as the
first
&
Son are
in the
same position
indorser
payment
in this case
Robinson
&
Commerce,
Belleville.
If the draft
were drawn
days' date
it.
is
reckoned from
sight.
29
The drawer
Lovell
of a draft
payee.
If
John
&
Son desired
themselves
the
amount of
Robinson
order.
&
own
The
follows
entries
:
of
R. Miller, Son
&
Co., Dr.
\
f
To Robinson &
Bills
Johnson.
Son
&
Go's.
would be
Robinson & Johnson's would be
&
Son.
John
To
&
understand
You
The
The
cents,
fare
is
twenty-five cents.
to the
conductor.
Another passenger
The conductor
this
him
to
pay
it
to
you,
is
which he does.
By
means the
saved.
as that
The
principle
of exchange here
for, as
is
precisely
see, if
the
same
you
will
John Lovell
&
Son
are in the
same
&
Co. by transferring
&
Johnson, just
as the conductor paid his debt to you by causing the other passenger
to pay
The Acceptor's
The
acceptor of a
that
bill,
Liability.
by accepting
will
it
Engages
acceptance.
he
pay
it
according
to
the
tenor
of his
30
The Drawer's
The drawer
of a
bill,
Liability.
by drawing
it
it
shall
tenor,
and
that
if it is
is
dishonored he
compenprovided
coni])elleQ to
pay
by indorsing
it
Engages
on due presentment
tenor,
it
shall
according to
and
that
if it is
dishonored he
compensate
it,
who
is
compelled to pay
Where a
Bill is
Dishonored,
Who May
Recover and
What.
In case of dishonor the holder
may
on the
bill,
and the
pay the
bill
may
recover
to
compelled
may
The amount
of the bill
if
(2) Interest
the
bill is
in
The expenses
bank
will
be
protested
if
written
senting."
upon
it
"
Not
to be protested
You may
by the medium of a
a cent.
when dunning
letters
would
fail
to
produce
attach
When
to
31
the "
No
pretest,"
for the
reason
that
if
your
draft
should
be
returned dishonored and protested, you will have to pay the notarial
charges yourself.
Definition
and Requisites
bill
is
of Acceptance.
The acceptance
of a
An
acceptance
is
invalid
unless
it
conditions, namely
(a)
It
must be written on a
signature of the
bill
The mere
sufficient
{/')
drawee
words
is
It
will
Where
mis-spelt,
in a bill the
drawee
is
name
if
is
bill
he
thinks
fit,
or he
may
accept
by
his
proper
signature.
When
bill is
is
not accepted
must
treat
it
as dishonored
lose his
by non-acceptance.
of recourse
If he
shall
right
against the
When
bill is
and no presentment
for
payment
is
necessary.
A
1.
Bill
it
for
Payment.
If
is
;
discharged
2.
bill
is
is
presented in
Where
the
bill is
it
be
made on
the day
falls
due
32
(/^)
Where
the
bill is
be
made
issue, in order to
render
the drawer
in order to
(i)
after its
indorsement,
designated by the
to
bill
pay
or refuse
payment on
his behalf,
if,
bill is
presented
at the
proper place
is
Where
a place of
;
payment
and the
bill
there presented
(2)
Where no
place of payment
is
is
given in the
and the
bill is
there pre-
sented
(3)
Where no
bill is
place of payment
at
is
specified
and no address
given,
and the
ness
if
presented
if
known, and
known
(4)
presented
if
to
presented at his
known
place
Where
a bill
is
presented
at
no person authorized
pay or refuse
to the
there,
no further presentment
drawee
required.
Where
any
city,
the place of
payment
is
town or
village,
specified,
and the
bill is
known
it
place of busiis
ness or
known
there
no such
presented
ment
is
sufficient.
S3
Bank Commission
The banks
drawee
usually charge }( of
for Collecting.
fur
i%
making
collections.
If
you
province,
draft
and the
would be
amount of your
$200.50.
,
drawee resides
Dominion,
amount
in the
body of the
draft,
'
with exchange."
Kinds of Drafts.
There are three kinds of drafts, namely, Time, Sight and Demand,
Time
The
is,
and a
draft
on demand
payable on presentation.
of
When
the
sight.
you desire
to give the
days for
after
payment of a
If
draft after
For example, to
give the drawee ten actual days from sight, draw at seven days' sight;
to give
at
one day's
sight,
and so
on.
The
days
will
named and
mature
make
after sight.
Flying").
fails,
when an
to hear of
It will
numerous
failures
among
dealers in the
latter
same
line.
because they
:
To
illustrate
amount of
capital,
am my
John Ulank
&
Co., of Toronto,
placed
me
my
me
that they
had
not.
for
and ask me
months
3i
that
that they
in the
to pay,
me
me
in the past.
Being of a grateful
turn,
and believing
tlie
draft,
hoping
upon again
to
name.
my
accept-
to
me, as
knew
they would.
am
surprised,
$50c each,
I
for their
accommodation.
for
and
which
receive
no
value.
folly,
As
until
my
my name
fail
is
upon
their
my
capital.
it
They
with this
would be
impossible
forme
pay
it
and discharge
on the
bill
and
be an accommodaaccept
Need
never
is
accommo-
dation drafts,
or, as
the expression
"
fly
any one.
The
man who accepts an accommodation draft the man who endorses an accommodation
on the maker
;
note.
The
latter
can come
man whom he
accommodated.
A
Co.,
business
man
is
&
of
;
due
Bank
Montreal
$300.00
so he writes
them
35
Kingston, June
Messrs. John Allen
g,
1893.
&
Co.,
Montreal.
Gentlemen,
acceptance
$300, and
I
full
my
is
in
me
draw on you
and exchange.
Yours
faithfully,
RICHARD ROE.
He
receives the following reply
:
Montreal, June
10, 1893.
Dear
Sir.
Your
letter of the
gth
inst.
is
received,
and
in 'reply
to
draw on us
at sight for
$300, to
assist
you
due June
T3th.
As requested,
interest
for that
amount, adding
and
exchange.
Yours
faithfully,
CO.
draw the
draft will
be shown by Roe to
the manager of the bank, with the request that the bank will disit.
He
consents.
Roe draws
Kingston, June
$300.00.
13, 1893.
At
sight,
for value
received, pay to
the
order of the
Bank of
to
dollars,
and charge
the
RICHARD ROE.
To
Messrs. John Allen
&
Co.,
Montreal.
(N. B.
his
own
it
over to the
bank.)
Roe has
Tohn Allen
v'v:
Co.
by check on presentation.
The
Roe
is
interest and cost of collecting the draft they draw back u])on
$1.50
so they draw
upon him
$301.50.
Entries.
Roe's entry when he draws
the draft on Allan.
)
r.ank Dr. $299.25. Discount Dr. 75. To John Allan & Co.$3oo.oo.
Allan's entry
when they
retire
(^
To Bank
R. Roe, Dr. $1.50.
$300.00.
\
(
Roe
with
To
|
interest,
$i-5o.
(^
Bills
on Roe
10 days.
To
$301.50.
"
John Allan
Interest
>
)
days' date.
To
The
Bills
$6oc.oo.
To Bank
and when he
retires the
600.00
of
acceptance
$301.50 he
$301.50.
will
make
Bills
Payable
To Bank,
$301.50.
A
is
Bank Draft
is
medium by which
money
draft payable
a remittance
made.
You
desire to send or
carry
to a distance in a
way
Buy from
bank a
on demand,
your order,
It
whom
cent,
the
money
is
intended.
will
more
it is
and
will
be
cashed
drawn upon.
it
If the draft
Bill of
is
called a Foreign
Exchange.
37
to
the ancients.
We
It is
have
pro-
bable that a
Bill
of Exchange was in
its
origin nothing
more than a
letter of credit
from a merchant
in
one country
to
to his debtor, a
merchant
in another, requesting
letter,
him
and was
where the
This
ly
mode
convenient for
parties
to the creditor,
;
for
he could thus
col-
lect his
facility
accommodation
in
to
him
to the
bearer of the
At
first,
many
money
left
but
it
was written
assignee
now
in use.
The
perhaps,
it
desirous to
the party to
it
whom
him
ances.
to
for that
his consent to
have been
fully set
forth at pages
27,28 and
29,
and
I shall
:
am
a produce commission
merchant
in
from the
firm of
John
I
Lord
&:
Co.,
London, England, an
it
vessel's
lading
my own
value
it.
The
of the wheal
two thousand
pounds,
which
have John
3S
Lord
I
&
Go's, authority to
bill
draw a
bill
on them
draw the
of exchange
upon them
I
St.
Montreal.
Exchange
Three days
for ^^{^2000.
of the same tenor and date unpaid), pay to the order of myself the
sum
of
Sterling,
for
value
received,
and
W. Johnson.
To
&
Co.,
St.,
New Broad
London,
E.
C, England.
2nd.
Montreal,
Exchange
Three days
for
^2000.
second of exchange
to
(first
and third
sum
of
Sterling,
value received,
account of
J.
W. Johnson.
To
&
Co.,
St.,
New Broad
London, E. C, England.
3rd.
Montreal,
Exchange
Three days
for
^2000.
exchange
(first
and second
of the same tenor and date unpaid), pay to the order of myself,
the
sum
of I'wo
Thousand Pounds
to the
received,
same
account of
J.
W. Johnson.
39
to
me
of John Lord
&
Co.
I shall
it
sell
it
to several
offer,
viz.:
made
I
the best
each pound),
it
dispose of the
bill
of
exchange
I
Bank, and
also indorse
it
the
bill
of lading over
assign to
me
in
there,
is
now
in a position to
j-^//
exchange on London.
Here
owe
that the
for sale
they will save the trouble and expense of transmitting bullion (gold
or silver) by buying bills
its
Lon-
don agent
sums
that they
may
require,
and
to the
whom
its
exhausted.
If
bills
amount than
for
in
if
London, or
if
which
is
just as good.
However,
the overdraft on
London
cor-
to remit.
You
are conducted,
and many
acts of
transfer of specie.
Gold
it,
is
the
common denominator
The wheat
Exchange represent
not the actual
is
medium
practically barter,
for
each other.
of Sterling Exchange is $4,867^, or 9>^ % over the old par, which The rate of exchange is the price at which it is being bought and sold daily. The Bank bought as above at $4.87 (above par) and sold say at $4.88.
was $4.44
4-9.
40
From
bank
in ]Montreal, let
transactions that are occurring daily in the great cities of the continent, in connection with
its
tions,
whereby
and actual
would be involved
Bills in
Set.
exchange, (see
Three, or
at
set
;
01
her parts
and one
part
The
original
object of issuing
different
bill
to
the
drawee
was paid.
When
the ocean
mails
carried
by
were
freciuent.
second
of exchange, altl;ough sailing two weeks later than the one by which
the
first
was
sent,
might reach
its
the other.
The
usually
of the
set.
LETTER OF CREDIT.
Colonial Bank, Barbados,
Messrs.
^V. 1
,
Brown Brothers
&
Co.,
New
Dkar Sirs, You are hereby
tion, of
York.
Mr. Belfield
Grannum on Mr.
E. T.
Grannum
of this Island,
at
30 days'
sight, to the
Hundred and
41
Twenty
from
Dollars,
this Credit to
remain
in
months
date.
The
last year.
am, Dear
Sirs,'
Yours
faithfully,
F. J.
Howell,
Manager.
Grannum
in
Brown
Bros.,
New
named
some banks
bill
for use
by
travellers.
They
are
more con-
venient than a
of exchange, because
upon them
in various countries.
The
whose order a
drawn
the
is
established by
l;is
it.
by
banker
who
issued
^Vhere he
submit
is
his identity,
he has only to
the margin.
CHEQUES ON A BANK.
A
cheque
is
bill
mand.
Form.
Stub,
No. 1,053.
No. 1,053.
Belleville, Ont.,
To
the Canadian
Bank
of
Commeice,
)
(Belleville
Branch
fe
&
Co.
Co., or order.
dollars.
$75-50
In
full
50/100
(in full of
of Account to date.
$75-50
Ace. to date.)
42
In the above example Robinson
in the
&
Commerce
Belleville,
and desiring
to pay
George Ritchie
&
The
paid,
checiue
drawn
as
above
will
serve as
when
is
it
is
and received
back
from
the
bank,
it
because
given
was
for,
by
Geo. Ritchie
ir.
&
Co.
before
or
Accepted Cheques.
On
it
at
for
payment.
The
ledger keeper
it.
who
accepts
it,
and
who pays
Indorsing Cheques.
A
way
cheque payable
is
to bearer
is
negotiated by delivery
one paysafest
able to order
is
The
to
make
See indorsements at
it
Do
for
it,
will
in
blank.
If
you
transfer
in
full.
Numbering Cheques,
Number
knowing
numbered,
your cheques so that you
may have
;
the satisfaction of
been returned
in packages, so that
any time.
bank on the
last
will
be
handed
to
you
you
right),
that
the balance
shown
You
will
43
agree.
numbers
and you
numbers,
sum
of
the difference.
The
been presented
for
made up
not then been charged by the bank to your account, hence the discrepancy.
of your
Bank Balance.
business
for a reputable
faith, to
man
when he has
have
it
returned with
Men who
don't care,"
porarily by drawing
meet.
man who
know
daily
how
his
balance stands,
posted closely,
in the ledger
can keep track of the bank transactions on the back of the stubs
of his cheques as follows
:
The
to-day, Nos.
129.
130.
131.
The proceeds
of a note discounted
amount
to $430.20.
deposit was
made
to-day of $600.
last
On
44
in
exchange of ^^ of i%.
You
for the
amount of
is
to
be paid
at
another branch.
you
your banker on
which no
interest
allowed, he
at
may
will
be
payment.
so that
at
they
41,
cannot
be raised or altered.
observe that there
given
page
left
you
will
no
unfilled
if
space
to the
Zl)
fraction (or
no fraction
follows
up
to
it
on the
right.
Neither on one side nor the other can any word be added.
fail
If
you
invite
fraud,
loser.
and
it
be the
when
identifying
For
example
John Jones,
whom you
underneath
on a cheque or
ed.
He
and
indorses
his signature
this,
write,
by,"
Doing
you only
certify that
he
is
John Jones
but
if
his,
you
but
may
say, "
would
"well,
let
it
responsibility
beyond
you."
You may
not
get
up a
reputation as an " obliging fellow," but you will have the satisfaction
safe.
Grossed Cheques.
When
crossed.
I.
it
is
it
is
Where
its
face an addition of
(a)
The word
between two
parallel
;"
transverse lines,
or
{/>)
Two
parallel transverse
"
;
lines
crossing,
is
crossed
Where
its
name
tliat
crossed specially,
and
to that bank.
A cheque may
3.
Where
a cheque
may
cross
it
generally
or specially.
4.
Where
cheque
is
may
cross
it
specially.
5.
Where
a cheque
is
may add
6.
Where
may
it
is
crossed
again cross
another bank
for
collection.
7.
is
sent to a
bank
for collection,
it
may
cross
it
specially to
itself.
8.
crossed checpie
may be
and
initialing
the
same, the
46
Book-Keeping Entries
for Cheques.
When you deposit in the bank, you make the Bank Dr. to Cash. When you draw a cheque, credit the bank and debit the person to whom, or the account for which, When you has been issued.
it
receive a cheque,
make Cash
Dr.
it.
to the
Cheques may
It
is
not
necessary
each cheque
singly.
The cheques
in
one sum
to
to-day, journalize
them from
Important Points
in
Receivable and
You.
I
Bills
Bills
will
when you
(the
retire
never charge
Bills
of the instrument
amount
credited
when
else
issued)
is
and
less
that
when
some one
disposed
of, Bills
than
when
received).
Examples.
You pay your
interest $5.00.
note,
face
$500 and
Bills
Interest
5.00
To Cash
$600, before maturity, and get a discount of $10 oft".
505.00
You pay
note,
face
Bills
Payable Dr
600.00
590. CO
To Cash
" Discount
10.00
of a note, face
Cash Dr
To
"
Bills
Receivable.
..
Interest
You receive less than the face of a note when disposing of it ; face $700, discount allowed $10.00.
If
Cash Dr
Discount
690.00
Dr
Receivable
10.00
To
Bills
700.00
you carefully observe the^e instructions, you will find that the difference between the two sides of liills Payable account will always agree with the notes outstanding and the difference between the sides of Bills Receivable account will always agree with the notes on hand. When issuing a note (or acceptance) bearing interest, the entry is just the same as if it were not. because the interest is a matter for the future.
;
47
o o
48
INTRODUCTORY.
the
What Law
is
Common Law?
What
is
Statute
relating to Bills of
Exchange grown
as
?
Give two
What
are the
commonest forms
of contracts?
Name
in
the two
kinds of contracts.
How may
be made?
How
?
every Con-
tract ?
When
this
Does
What
is
the
when was
in
it
passed
;
It
writing
name make
What What
a
to
a seal
Who
are competent to
a contract
What
is
minor?
What must
binding?
make
it
How
is
authority conferred
is
upon an agent?
?
required
When
Statute
What
is
the
NOTES.
State the three reasons that
against a debtor.
a note
Give a
notes
What
to
is
meant by a determinable
note.
?
future
time?
?
;
transferred
tiable note
tiable
How
;
are
transferred
by indorsement.
note negotiable
in-
49
dorsement
the
a note payable on
demand
a joint
and
several note.
What
are
What
Explain an accommodation
state
why
it is
of the indorser
and not
?
which
note.
is
payable
is
Name
What
?
What
Explain what
is
meant by the
"
in
What
a usury law ?
What
When
due
?
would a
a a
due
fall
When would
What
is
power of attorney
per pro stand
are
its
How
When
?
What
What
is
Explain indorsement
holder do?
restrictive
Explain indorsement in
;
full; qualified
indorsement;
indorsement
How
could
What
is
Where should
?
What
maturity
If the services of a
his functions ?
is
it
What
noting?
waiving
protest
Give examples.
there
is
Why
unnecessary to
is
no indorser?
it ?
What
How
When
?
When
renewing
What
is
bill
receivable
What
payable
Analyse the
bills
receivable
and
bills
payable
accounts.
Which
What
an
I.
O. U.
DRAFTS.
Give a definition of a Draft or Inland
Bill.
draft.
How many
are
there
to a
Name
them.
?
Explain
Which one
same
What
the
bill
maker of a note
first
What
the
same
position as
indorser on a
note
To
?
hold the
Explain
drawer of a dishonored
the theory of exchange.
or i)ersons
How
is
days after
accepted
How
is
a draft payable
ten
days after
ddfe accepted
draft
From what
after sight ?
From what
What
is
a draft
are the
is it
To whose
time
draft.
order
made payable
payee's
for a
Give the
entry.
Give the
drawee's entry.
liability.
Give an
illustration of
exchange.
In case of dishonor,
drat't is
who may
recover,
?
and what ?
What
will
be done when a
if
dishonored
How
is
may
protest be avoided
desired
is
acceptance.
Explain what
due ijresentment
payment.
?
What
How
tell
will
how
much
the
exchange
will
be?
Name
the
three
kinds
of drafts.
Explain eich.
matter
To
it
how
him
long
may
it ?
To
give
?
fifteen
is
days
To
give
To
give no
is
time
What
an accommodation draft
What
expression
used
to describe this
method of
raising
money
How would
you proceed
51
to obtain assistance by draft to retire an acceptance or note
is
What
is
What
?
does par
mean?
its
When
?
exchange
What was
origin
Give
an
illustration of
foreign
exchange.
?
How many
is
bills
are usually
Why
Give
first bill
in a set of
exchange
?
The second
The
What
is
letter
of credit
What
a circular letter of
credit ?
CHEQUES.
Give a definition of a cheque.
Give a form.
How
is
a cheque
act of the
drawn
in
order that
it
may
serve as a receipt?
?
What
Explain what
it ?
is
an accepted cheque.
officer
What
pays
is
officer of the
it
bank accepts
What
of the bank
?
How
?
is
cheque payable
to
bearer negotiated
How
should
?
cheque payable
to order negotiated ?
When
cheque
Why
should cheques be
?
numbered
How
cheques be preserved
How
If a discrepancy exists
State a simple
method
the rate
What
charged
?
is
When
is
it
Cheques
you take
a payee
?
payable
par at
against
another
fraud
?
branch,
explain.
How
will
precaution
How
?
would you
identify
for
What
are
crossed
cheques
cheques.
Receivable and
Payable accounts.
AMERICA.
TWENTY-FIFTH YEAR.
B.
ROBINSON,
J.
W. JOHNSON,
F.
C. A, Principals.
COLhVTRIES REPRESENTED
BY THE STUDENTS.
GUIANA).
BERMUDA.
TURK'S ISLAND,
GRENADA,
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FORTUNE
BAY.
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PRINCE EDWARD ISLAND,
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SCOTIA,
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(every county),
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ASSINIBOIA,
United States,
MAINE,
State),
WISCONSIN,
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MONTANA,
CALIFORNIA,
NEVADA,
The high
standing and reputation o f
DAKOTA, WASHINGTON.
Ontario Business College, Belleany similar institution, and the success of its
ville, by which it secures an attendance unefpUed in have been attained by the thoroughness of its worlc
graduates.
Send
for Circulars.
10th
EDITION
book
ot
NOW IN
PRESS,
This
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is
the text
It
and most
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understood
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It
Banking,
Business
Correspondence,
Commercial Law,
and
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It
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Book
for
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It is
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Accountant and
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Country Merchant.
Address,
JUST PUBLISHED.
THE SIXTH EDITION OF
croiin^soisr's
iBi
B'S'
cr.
AV".
cromsrsoKT, f.
is
-^.
The
first
The second
in
a comprehensive
transactions throughout
which the author has matured from long practical knowledge and
experience as an accountant and auditor in large business centres,
and
later
as a teacher of accounts.
is
In
addition to
are
this,
much
valuable information
given,
and explanations
made
regarding
Since the
first
gratifying evidence
that the
from
all
parts of
Canada and
it
to
be what
was intended
an
its
efficient
aid
and
work of
Joint Stock
to
is
Company.
The
sale of the
The evidence
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merit
the
for
fact
it.
that
six editions
in
previous ones,
new and
practical
The work
ADDRE.SS,
"~"
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