Slides - Banking Law
Slides - Banking Law
Slides - Banking Law
LEARNING OUTCOME
❖ CONCEPT OF BANKER
❖ CLASSIFICATION OF RELATIONSHIP
❖ TERMINATION OF RELATIONSHIP
❖ NEGOTIABLE INSTRUMENTS
DEBTOR-CREDITOR RELATIONSHIP
CONCEPT OF BANKER
of banking;
CLASSIFICATION OF RELATIONSHIP
DEBTOR-CREDITOR RELATIONSHIP
❑ GENERAL RELATIONSHIP
SPECIAL RELATIONSHIP
❑ Since the funds are lent to the customer, he/she becomes the
borrower, and the banker becomes the lender.
Secured Transaction
“Transaction in which the payment of a debt is
owns.” e.g.
DEBTOR-CREDITOR RELATIONSHIP
❑ Secured party: It is the party that holds the interest in the secured property,
party;
collateral;
II. The secured party must give value (consideration) to get the security
agreement;
✓ Once these three criteria are met, the secured party’s rights
attach to the collateral. When attachment occurs, the creditor
becomes a secured party with an interest in the collateral.
DEBTOR-CREDITOR RELATIONSHIP
agency)
Priority disputes
Default
Default (cont.)
Default (cont.)
1. Take possession of the collateral*
*Secured party may not breach the peace in repossessing the property;
*These remedies are limited if the debtor has filed for bankruptcy.
❑ An unsecured creditor has just the option to file suit and seek a
judgment in the amount of the debt
DEBTOR-CREDITOR RELATIONSHIP
III. The closing of the account by the bank after giving due notice.
Bankruptcy
“When an entity is unable to pay its debts, bankruptcy law provides
various options for the entity to resolve these debts.”
1. All bankruptcy cases begin with the filing of a petition for bankruptcy.
2. Once the petition is filed, the court grants an automatic stay for creditor
actions against the debtor’s estate. In other words, creditors’ legal actions
against the debtor must cease.
3. The court determines whether an order of relief should be granted.
4. The creditors meet with the debtor.
5. Some type of payment plan is created and approved, usually by the
creditors and the court.
6. The payment plan is implemented by the debtor.
7. Debts remaining after the plan is implemented are usually discharged.
DEBTOR-CREDITOR RELATIONSHIP
Bankruptcy relieves
❑ Liquidation (when a debtor turns over all assets to a trustee, an
SURETYSHIP
NEGOTIABLE INSTRUMENTS
❖ Once a sales contract has been created and executed and the
contract, the next phase is the payment by the buyer to the seller
❖ What is negotiable?
✓ Negotiable means transferable.
✓ The negotiation that goes on refers to the transfer of the instrument
between two people, or from one bank to another, or even from
one country to another.
❖ What is an instrument?
✓ In the broadest sense, almost any agreed-upon medium of
exchange could be considered a negotiable instrument.
✓ In day-to-day banking, a negotiable instrument usually refers to
checks, drafts, bills of exchange, and some types of promissory
notes (commercial papers)
NEGOTIABLE INSTRUMENTS
6. The document must contain the words of negotiability, e.g., “pay to the
bearer.”
NEGOTIABLE INSTRUMENTS
CHECKS
transactions
NEGOTIABLE INSTRUMENTS
TYPES OF CHECKS
drawn.
NEGOTIABLE INSTRUMENTS
TYPES OF ENDORSEMENT
❖ Blank: Sign the back of the check with the name that matches
DRAFTS
✓ Most drafts are used for the purchase of goods and services when
BILLS OF EXCHANGE
negotiable instruments.
NEGOTIABLE INSTRUMENTS
PROMISSORY NOTES
MONEY ORDERS
ACCEPTING DEPOSITS
❑ Banks must credit customers’ accounts as well as draw from
them.
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