What is restrictive & non-restrictive idorsement

A restrictive indorsement is an indorsement that contains some sort of instruction from the indorser.

A nonrestrictive indorsement is an indorsement that has no instructions or conditions attached to the payment of funds.

What is blank & special indorsement

A blank indorsement is an indorsement that does not specify a particular indorsee. It creates bearer paper.

A special indorsement is an indorsement that contains the signature of the indorser and specifies the person (indorsee) to whom the indorser intends the instrument to be payable. It creates order paper.

How order and bearer paper can be converted ?

Instruments can be converted from order paper to bearer paper, and vice versa, many times until the instrument is paid. The deciding factor is the type of indorsement placed on the instrument at the time of each subsequent transfer. An indorsement is the signature (and other directions) written by or on behalf of the holder somewhere on the instrument.

How order and bearer paper are negotiated ?

Order paper is negotiated by indorsement and delivery.
Bearer paper is negotiated by delivery; indorsement is not necessary.

Explain parties to check

Drawer to the check—the customer who has the checking account and writes (draws) the check
Drawee of the check—the financial institution where the drawer has his or her account
Payee of the check—the party to whom the check is written

What do you mean by orders to pay and promises to pay ?

• Orders to pay are drafts or checks.
• A draft is a three party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party.
• A check is a draft that is drawn on a financial institution and is payable on demand. Promises to pay are promissory notes and certificates of deposit.
• A promissory note is a two party instrument that is an unconditional written promise by one party to pay money to another party.
• A certificate of deposit is a special type of note where the maker is the financial institution that issues the certificate and the payee is the party to whom the certificate is made payable.

Difference between a negotiable and a nonnegotiable instrument

Negotiable instruments must meet certain requirements established by Article 3 of the Uniform Commercial Code. An instrument that does not meet these requirements is not a negotiable instrument and is subject to contract law.According to the UCC 3-104(a), a negotiable instrument must:

Be in writing
Be signed by the maker or drawer
Be an unconditional promise or order to pay
State a fixed amount of money
Not require any undertaking in addition to the payment of money
Be payable on demand or at a definite time
Be payable to order or bearer

Terminology of Negotiable Insturment (Commercial Paper)

allonge—A separate piece of paper attached to the instrument on which the indorsement is written.
assignee—The party to whom the right has been transferred.
assignment—The transfer of contractual rights by the obligee to another party.
assignor—The party who transfers the right.
bearer paper—Bearer paper is negotiated by delivery: indorsement is not necessary.
blank indorsement—An indorsement that does not specify a particular indorsee. It creates bearer paper.
certificate of deposit (CD)—A two-party negotiable instrument that is a special form of note created when a depositor deposits money at a financial institution in exchange for the institution's promise to pay back the amount of the deposit plus and agreed-upon rate of interest upon the expiration of a set time period agreed upon by the parties.
check—An order by the drawer to the drawee bank to pay a specified sum of money from the drawer's checking accounting to the named payee (or holder).
collateral—Security against repayment of the note that lenders sometimes require; can be a car, a house, or other property.
demand instrument—An instrument payable on demand.
demand note—A note payable on demand.
draft—A three-party instrument that is an unconditional written order by one party that orders the second party to pay money to a third party.
drawee of a check—The financial institution where the drawer has his or her account.
drawee of a draft—The party who must pay the money stated in the draft. Also called the acceptor of a draft.
drawer of a check—The checking account holder and writer of the check.
drawer of a draft—The party who writes the order for a draft.
drawer's negligence—The drawer is liable if his or her negligence led to his or her forged signature or the alteration of a check. The payor bank is not liable in such circumstances.
fictitious payee rule—A rule that says a drawer or maker is liable on a forged or unauthorized indorsement of a fictitious payee.
fixed amount—A requirement of a negotiable instrument that ensures that the value of the instrument can be determined with certainty.
fixed amount of money—A negotiable instrument must contain a promise or order to pay a fixed amount of money.
forged indorsement—The forged signature of a payee or holder on a negotiable instrument.
holder—A person who is in possession of a negotiable instrument that is drawn, issued, or indorsed to him or his order, or to bearer, or in blank.
imposter—A person who impersonates a payee and induces a maker or drawer to issue an instrument in the payee's name and to give it to the imposter.
imposter rule—A rule that says if an imposter forges the indorsement of the named payee, the drawer or maker is liable on the instrument and bears the loss.
indorsee—The person to whom negotiable instrument is indorsed.
indorsement for deposit or collection—An indorsement that makes the indorsee the indorser's collecting agent (e.g. for deposit only)
indorsement—The signature (and other directions) written by or on behalf of the holder somewhere on the instrument.
indorser—The person who indorses a negotiable instrument.
instrument—Term that means negotiable instrument.
maker of a CD—The bank (borrower).
maker of a note—The party who makes the promise to pay (borrower).
money—A "medium of exchange authorized or adopted by a domestic or foreign government."
negotiable instrument—A special form of contract that satisfies the requirements established by Article 3 of the UCC. Also called commercial paper.
negotiation—Transfer of a negotiable instrument by a person other than the issuer to a person who thereby becomes a holder.
nonnegotiable contract—Fails to meet the requirements of a negotiable instrument and, therefore, is not subject to the provisions of UCC Article 3.
nonrestrictive indorsement—An indorsement that has no instructions or conditions attached to the payment of the funds.
order paper—Order paper is negotiated by (1) delivery and (2) indorsement.
order to pay—A drawer's unconditional order to a drawee to pay a payee.
payable on demand or at a definite time requirement—A negotiable instrument must be payable either on demand or at a definite time.
payee of a CD—The depositor (lender).
payee of a check—The party to whom the check is written.
payee of a draft—The party who receives the money from a draft.
payee of a note—The party to whom the promise to pay is made (lender).
permanency requirement—A requirement of negotiable instruments that says they must be in permanent state, such as written on ordinary paper.
portability requirement—A requirement of negotiable instruments that says they must be able to be easily transported between areas.
promise to pay—A maker's (borrower's) unconditional and affirmative undertaking to repay a debt to a payee (lender).
promissory note—A two-party negotiable instrument that is an unconditional written promise by one party to pay money to another party.
restrictive indorsement—An indorsement that contains some sort of instruction from the indorser.
sight draft—A draft payable on sight. Also called a demand draft.
signature requirement—A negotiable instrument must be signed by the drawer or maker. Any symbol executed or adopted by a party with a present intent to authenticate a writing qualifies as his or her signature.
special indorsement—An indorsement that contains the signature of the indorser and specifies the person (indorsee) to whom the indorser intends the instrument to be payable. Creates order paper.
time draft—A draft payable at a designated future date.
time instrument—An instrument payable (1) at a fixed date, (2) on or before a stated date, (3) at a fixed period after sight, or (4) at a time readily ascertainable when the promise or order is issued.
time note—A note payable at a specific time.
trade acceptance—A sight draft that arises when credit is extended (by a seller to a buyer) with the sale of goods. The seller is both the drawer and the payee, and the buyer is the drawee.
unconditional—Promises to pay and orders to pay must be unconditional in order for them to be negotiable.
unconditional promise or order to pay requirement—A negotiable instrument must contain either an unconditional promise to pay (note or CD) or an unconditional order to pay (draft or check).
unqualified indorsement—An indorsement whereby the indorser promises to pay the holder or any subsequent indorser the amount of the instrument if the maker, drawer, or acceptor defaults on it.
unqualified indorser—An indorser who signs an unqualified indorsement to an instrument.

CFA_Ethics_5

S retired several years ago and relinquished her membership in CFA Institute. She had the CFA designation up until then. She has decided to go back to work and puts the following statement on her resume: “I earned the CFA designation 10 years ago.” Is this a violation of Standard VII(B)?

A) No, because she uses "CFA" as a noun.
B) Yes, because she uses "CFA" as a noun.
C) Yes, she has used the letters "CFA" in an undignified manner.
D) No, as long as she does not indicate she currently has the designation.

CFA_Ethics_4

Standard VI(B), Priority of Transactions, applies to transactions an analyst takes on behalf of:

A) his employer.
B) his clients.
C) personal accounts.
D) all of these.

CFA_Ethics_3

Miller, CAIA, and Level II CFA candidate, heads the research department of a large brokerage firm. The firm has many analysts, some of whom are subjected to the CFA Institute Code of Ethics and Standards of Professional Conduct. If Miller delegates some of her supervisory duties, which statement best describes her responsibilities under the CFA Institute Code and Standards?

A) CFA Institute Standards prevent Miller from delegating supervisory duties to subordinates.
B) Miller's supervisory responsibilities do not apply to those subordinates who are not subjected to the CFA Institute Code and Standards.
C) Miller retains supervisory responsibilities for those duties delegated to her subordinates.
D) Miller no longer has supervisory responsibility for those duties delegated to her subordinates.

CFA_Ethics_2

Which of the following is NOT expressly prohibited by Standard I(C), Misrepresentation?

A) misrepresenting the services a member is capable of performing.
B) misrepresenting a member’s qualifications or the qualifications of their firm.
C) misrepresenting a member’s academic or professional credentials.
D) providing information on guaranteed investment products.

CFA_Ethics_1

An analyst who routinely purges the files that support his research and recommendations:

A) is acting in accordance to Standard III(E), Preservation of Confidentiality.
B) is acting in accordance to Standard IV(A), Loyalty to Employer.
C) may be violating Standard II(A), Material Nonpublic Information.
D) may be violating Standard V(C), Record Retention.

Practical Problems_Contract Act_87

What would be consequences of breach of employment bond given by an employees: On the employee himself, On the company that employs him subsequently. If the bond states that the employees can be used for criminal breach of trust on breach of the bond, how enforceable is this clause?

As regard the breach of the employment bond given by an employee in this regard it is advised that if an employee has signed a bond after he get specialized training from the company then a civil case can be filed against him for recovery of the amount mentioned in the bond if there is any breach. As regard the company that employs him subsequently, there is no liability of the company, which employs him subsequently. Breach of bond is not criminal breach of trust it is of civil consequences and that also have to be proved in the Court of Law. In no manner it can be termed as criminal breach of trust.

Providend Fund Act_Practical Problems_21

What are the rights of person if a contract has no mention of salary breakups and the employers PF is included as part of the Gross Salary?

There is nothing illegal if there is no mention of salary breakup and employers PF included as part of the Gross Salary. The PF can be deducted as a Contribution of employee from the Gross Salary. In addition the employer has to contribute his share of PF subject to maximum privilege prescribed in Section 6 of Act.

Providend Fund Act_Practical Problems_20

Can any employer send his employee on forced leave for not to initiate disciplinary proceeding but to legally punish him?

The employer can not send an employee on forced leave without initiating any disciplinary proceedings against an employee. Only after necessary show cause or charge sheet has been issued and after holding disciplinary inquiry or proceedings, the employer can legally punish you. If the employee fails to receive the payment from the employer after having entered into full and final settlement of the account, the employee can file a civil suit for recovery of office dues. In case gratuity has not been paid then the employee can proceed under the provisions of Payment of Gratuity Act and then in case Provident Fund has not been released after the employee leaving, then he can proceed under the provisions of the Provident Fund Act.

Industrial Dispute Act_Practical Problems_1

I had been working in Pvt. Ltd. Company for 2 and half years as a permanent employee. As per the company rules I was eligible for medical and LTC benefits. When I leave the job they suppose to give me the whole Medical and LTC benefits plus 15 days salary. I had served one month notice also. They promised me to pay after some time since the financial condition of the company was not good at that time. After repeated telephonic reminder and subsequent letters they kept quiet. It is almost 2 years since then, and I came to know that this company continue to do such things with other employees also. What I can do now? Can I still get money back?

Yes, you can claim all the benefits, which the company has not paid you after your resignation. You can file a civil suit against the company and claim those dues. In case you are a "workman" within the definition of Industrial Disputes Act, you can file a petition under Section 33 (c) (ii) of the said Act and claim your benefits.

Bonus Act_Practical Problems_32

Is Bonus right of every employee. For calculating bonus does the interest earned by Company in FDRs is also to be counted.

Bonus is something given in addition to what is usual or strictly due; money or anything given in addition to an employee's usual pay or salary. The payment of Bonus Act 1965 provides for payment of bonus to persons employed in a factory and in every other establishment employing twenty or more persons. In calculating bonus, interest earned by a company on fixed deposits is to be excluded.

Payment of Gratuity_Practical Problems_1

An employee who is governed by the Payment of Gratuity Act, 1972 committed a theft in the course of his employment. And consequently his services was terminated. State in this connection, whether the gratuity payable to him shall be wholly or partly forfeited.

The gratuity payable to an employee may be wholly or partially forfeited, where the services of an employee are terminated on the ground of:
(i) riotous or disorderly conduct or act of violence; or

(ii) committing an offence involving moral turpitude in the course of his employment.

Theft is an offence involving moral turpitude and consequently, if the services of an employee had been terminated for committing theft in the course of his employment, the gratuity payable to him under the provisions of the Act shall be wholly forfeited in view of Section 4.

Bonus Act_Practical Problems_31

Star Ltd. suffered heavy losses during the current accounting year and hence was not able to pay minimum bonus to its workmen. Referring to the provisions of the Payment of Bonus Act, 1965 state whether the company is required to give the minimum bonus irrespective of losses and it can be exempted by from payment of Bonus.

Subject to the other provisions of the Payment of Bonus Act, every employer shall be bound to pay to every employee in respect of every accounting year, minimum bonus which shall be 8.33% of the salary or wage earned by the employee during the accounting year or Rs.100, whichever is higher, whether or not the employer has any allocable surplus in the accounting year. But if the employee has not completed 15 years of age at the beginning of the accounting year he will be entitled to a minimum bonus which shall be 8.33% of the salary or wage during the accounting year Rs.60/- whichever is higher.

Even if the employer suffers losses during the accounting year he is bound to pay minimum bonus as prescribed by Section 10

NI Act_Practical Problems_56

P owes money to Q. Therefore, he makes a promissory note for the amount in favour of Q, for safety of transmission he cuts the note in half and posts one half to Q. He then changes his mind and calls upon Q to return the half of the note which he had sent. Q requires P to send the other half of the promissory note. Decide how a rights of the parties are to be adjusted.

The question arising in this problem is whether the making of promissory note is complete when one half of the note was delivered to Q. Under Section 46 of the N.I. Act, 1881, the making of a P/N is completed by delivery, actual or constructive. Delivery refers to the whole of the instrument and not merely a part of it. Delivery of half instrument cannot be treated as constructive delivery of the whole. So the claim of Q to have the other half the P/N sent to him is not maintainable. P is justified in demanding the return of the first half sent by him. He can change his mind and refuse to send the other half of the P/N.

NI Act_Practical problems_55

A promoter who has borrowed a loan on behalf of company, who is neither a director nor a person-in-charge, sent a cheque from the companies account to discharge its legal liability. Subsequently the cheque was dishonoured and the compliant was lodged against him. Does he liable for an offence under section 138?

According to Section 138 of the Negotiable Instruments Act, 1881 where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for discharging any debt or liability, and if it is dishonoured by banker on sufficient grounds, such person shall be deemed to have committed an offence and shall be liable. However, in this case, the promoter is neither a director nor a person-in-charge of the company and is not connected with the day-to-day affairs of the company and had neither opened nor is operating the bank account of the company. Further, the cheque, which was dishonoured, was also not drawn on an account maintained by him but was drawn on an account maintained by the company. Therefore, he has not committed an offence under section 138.

Practical Problems_Contract Act_86

X advances to Y Rs.10,000 on the guarantee of Z. The loan carries interest at ten percent per annum. Subsequently, Y becomes financially embarrassed. On Y’s request, X reduces the interest to six per cent per annum and does not sue Y for one year after the loan becomes due. Y becomes insolvent. Can X sue Z?

X cannot sue Z, because a surety is discharged from liability when, without his consent, the creditor makes any change in the terms of his contract with the principal debtor, no matter whether the variation is beneficial to the surety or does not materially affect the position of the surety.

Practical Problems_Contract Act_85

Ajay induced Anil to buy his car saying that it was in a very good condition. After taking the car, Anil complained that there were many defects in the car. Ajay proposed to get it repaired and promised to pay 50% cost of repairs. After a few days, the car did not work at all. Now Anil wants to rescind the contract. Decide giving reasons.

The aggrieved party, in case of misrepresentation by the other party, can avoid or rescind the contract [Section 19, Indian Contract Act, 1872]. The aggrieved party loses the right to rescind the contract if he, after becoming aware of the misrepresentation, takes a benefit under the contract or in some way affirms it. Accordingly in the given case Anil could not rescind the contract, as his acceptance to the offer of Ajay to bear 50% of the cost of repairs impliedly amount to final acceptance of the sale

Practical Problems_Contract Act_84

A promised to pay B for his services at his (A) sole discretion which found to be fair and reasonable. However, B dissatisfied with the payment made by A and wanted to sue him. Decide whether B can sue A under the provisions of Indian Contract Act, 1872?

B’s suit will not be valid because the performance of a promise is contingent upon the mere will and pleasure of the promisor; hence, there is no contract. As per section 29 of the Indian Contract Act, 1872 – agreements, the meaning of which is not certain, or capable of being made certain, are void”.