Here are your brief notes on Accommodation Bills

An accommodation bill is a bill drawn by one person upon another, who accepts it for the mere convenience of the drawer, that is, not in consideration of value received, but as a means of raising money in behalf of the drawer.

The object of an accommodation bill should merely be that of affording assistance to a merchant in case of some unexpected emergency, on the understanding that the drawer, in whose favour the bill is accepted, is to provide the accommodation acceptor with funds to meet the bill when due.

The system has, however, degenerated into a ficti­tious expedient, whereby men of broken credit try to keep up for some time longer an unsustainable position, and has, therefore, often proved ruinous to credulous people lending their name to unscrupulous friends.

In the slang of trade, accommodation bills are often called kites or windmills, which gives an idea of the consideration they are held in by business men.

Promissory Notes.-

A promissory note, called also a note of hand, differs from a bill of exchange, inasmuch as the latter conveys an order of payment from one party to another, while a promissory note is a document whereby one person engages to pay directly a certain sum of his own.

There are, therefore, two parties only to it, viz.: the maker, who issues and signs the note, and the payee, to whom the promise of pay­ment is made. For the same reason a. promissory note needs no acceptance.

Promissory notes are, like bills, classed as:-inland and foreign notes; notes to order ; special notes ” not negotiable” ; notes to bearer; notes ₍ on demand ox at sight, and notes for term, the latter being payable either at a fixed date or at a certain time after date.

Promissory notes usually run as follows:

All the provisions concerning bills of exchange apply to notes, such excepted as relate to acceptance and to the drawee, there being no drawee (as will have been seen from the form just given) in the case of notes.

Cheques.-

A cheque, originally called check, is an instrument by which a person, who has money of his own deposited with a banker, orders him to pay on demand, out of the amount in his hands, a specified sum to another party.

Cheques partake, therefore, of the nature of bills of exchange; they are but bills at sight drawn on bankers. The only difference existing between the two kinds of money orders is that a man may draw a bill of exchange on another for any con­sideration of credit, while a cheque cannot be drawn unless on a banker, on the sole consideration that funds are existing with him for the drawer’s account.

The parties to a cheque are, of course, the sam& as to a bill of exchange, viz.: the drawer, the drawee, and the payee, besides indorsers and indorsees, if any; the rights and liabilities of each party being exactly the same as in bills of exchange payable on demand.

All tho rules concerning the drawing, indorsement, pre­sentation, payment, notice of dishonour, noting and protest, are applicable to cheques; protest is, how­ever, very seldom required. Like bills of exchange, cheques may be inland or foreign, and payable to a certain person only, to drawer, to order, to bearer.

Crossed Cheques.-

A peculiarity of British inland, cheques is that of crossing, which has been resorted to as a protection against forgery, theft, or loss, and which is now engrafted on the commercial law of England.

The crossing of a cheque is done by drawing across the document two transverse lines, with or without the words: and Company, or & Co., between them, which is called a general crossing, or by writing between the lines the name of a banker, which is called a special crossing.

The purport of such a measure is to prevent the cheque being cashed Crossed Cheques Act, 19 and 20 Victoria, cap. 23) Otherwise than through a banker for the account of the payee.

A cheque, when crossed generally, is payable to any banker; when specially crossed, can be cashed only by the one mentioned’ in the crossing.

As a further safeguard, the words: not negotiable, are sometimes added to the crossing, when the person receiving such has no better title to it than the person from whom he received it.

A cheque may be crossed generally or specially by the drawer or by the holder; the latter being likewise empowered to change a general into a special crossing, or to add the words not negotiable. The banker, also, to whom a cheque has been crossed, has the privilege of crossing it to another banker for collection.

Thus a cheque to bearer, originally payable to whom­soever presents it, is, by the expedient of crossing, rendered quite safe for the banker, who pays it, as only another banker can present it for payment, who knows the party from whom he received it, or for whose account he is to cash it.

Payment of Cheques.-

Like bills of exchange, cheques must be presented for payment within a reasonable time, which generally does not exceed the banking hours of the day after their respective date, when payable at the same place of issue.

When pay­able at another place, a cheque should be forwarded the day after receipt. The distance, the custom of the place, and other circumstances must be taken into account.

I.O.U.s.-

The form: I owe you, is legally contracted into I.O.U., and such an abbreviation is frequently used as the simplest of all English instruments of credit, so that it now serves as a name to it.

An I.O.U. is but the acknowledgment of a debt existing at the time when the document was drawn up.

It bears no date of payment, and is not, therefore, a promissory note. It is, in fact, neither negotiable nor transferable, nor does it possess any of the cha, racteristics or effects attendant on bills and notes.

It merely gives to the holder the right of suing his debtor to obtain payment of the sum therein men­tioned, the term of which is fixed by the court accord­ing to circumstances.

The following is the usual form of an I.O.U.: