Business is regulated by the government for many reasons such as public welfare and safety, protection of business and revenue generation. Several businesses are overseen and reviewed regularly because if their activities go wrong could have harmful impacts on human health, community structure or financial welfare. Several regulations have been placed for protecting those people who have expanded their business properly like valid license as well as no criminal record (Rutland, 2018). Several programs need licensing or certification that industries need to pay to operate their business. The funds are gathered to pay to the government programs, which carry out the omission of the particular business. On the other hand, it is acknowledged that in several cases, some part of the revenue diverts for general government, which is considered as tax (Rutland, 2018).
In the 20th century, regulation of industry had developed at many levels of government through the commission’s form. Government agencies and departments are heavily engaged. However, commissions are considered as responsive as well as board members provide approachable face to the business interests within the government.
A regulatory agency or regulatory body is a government agency or public authority accountable for applying autonomous power in some area regarding human activity within supervisory or regulatory capacity. The regulatory agency is generally started to implement safety and to protect the consumers in the market at the period of imperfect competition (Woods, 2018). Some of the examples of regulatory agencies are Insurance Regulatory and Development Authority (IRDA), Medicines and Healthcare products regulatory agency, Securities and Exchange Board of India, U.S. Securities and Exchange Commission and Federal Communications Commission. On the other hand, Non Regulatory agency involves agreements, services, and businesses that do not have to follow the official rules. The non-regulatory agency is also known as the Federal agency. It gives leadership globally and nationally to prevent work regarding injuries and illnesses. Several programs regarding non-regulatory are defined which are intended to complete existing regulations (Woods, 2018). As an example, the influence of Non-regulatory agency on the Pear products. The Non- regulatory agency influences businesses by offering employment by hiring several organizations to support internal processes.
The federal agency needs to follow the rulemaking procedure to develop a new rule. The Notice of Proposed Rulemaking (NPRM) is the official document, which explains and announces the plan of the agency to address the problem or to accomplish the goal. In the procedure of Rulemaking, agency enhances “Draft Proposed Rule” after that OIRA review that draft rule. Then federal agency publishes the Proposed Rule, the agency receives the comments as well as make changes towards the Proposed Rule again OIRA review the Final draft rule. Finally, Federal agency publishes the final Rule that is Judicial Review and Congressional review. The process of rulemaking maintains the transparency and provides an opportunity to the member of public ample to offer input on content regarding the rules. The federal agency needs to generate documents regarding rulemaking planning. The documents provide notice to the public on rulemaking activity. To enhance regulations as well as to mitigate risk regarding the rules, agency involves stakeholders within the process of rulemaking.
Warranty is the guarantee to the client against the services and features of the product. It is created at the purchase time as well as the sellers assure and promise that the products would work properly, and if any issue occurs, the organisation would look after the problem (LAW, 2015). Any statement regarding the value of assurance or merchandise created by the seller to buyer in respect of products and enhances the base of the agreement is also acknowledge as warranty. In the business law, a warranty means promise, not a condition of in nominating or contract term; it means not going to root of the contract. Which only designate an innocent party towards the damages if it is infringing. Warranty is a written guarantee issued to purchaser by the manufacturer. The promised has been written in the warranty to replace or repair the product at a particular time. Sellers make warranties because warranties assist in protecting the consumers on the products as well as they are the concern to the federal laws. If any seller provides an extended warranty, then it needs to protect the product above an initial agreement created between the seller and buyer. Warranty is the type of insurance and accountable to same regulations according to the state laws and the engaged parties.
Under state law, there are two types of warranties created by the sellers are as follows:
- Express Warranties- It is an assurance that the product fulfils a certain standard regarding quality and reliability. It can be in written form or spoken by the seller at the time of dealing. Express warranty consider the following types such as statements created during the negotiation, tag on the product or sample and agreement of the sales (Nowka, 2016). Express warranties provided by the supplier affirmation to the purchaser about the products. If the product fails, then the seller will fix or replace the product, and he will not take any extra charge.
- Implied warranties- Most of the consumer purchases are protected through the implied warranties for the product. It means the product is warranted to work. Such as vacuum cleaner does not produce enough suction for cleaning an average carpet, it is implied a warranty. One more example of implied warranties is that if anyone purchased the refrigerator, the fridge would process as intended. It is considered that if the fridge cannot cool accordingly, then the manufacturers do not have an express warranty, but the implied warranty will influence (Castellano, & Tolosa, 2015).
A merchant being a businessperson deals with the commodities, which are not made by himself. Wholesale merchant and retail merchant are the two types of merchants. On the other hand, a seller is a person who sells and buys financial instruments like derivatives, bonds and stocks. They can be professionals those work in the commercial or corporate institution. They sell and buy instruments in the commodity market, derivatives and stock markets. Chapter Contents
Negotiable instrument means personal check is signed document, which promises an amount of payment to specified person or assignees. It is also considered as a formalized form of IOU. IOU is the document, which acknowledges the debt owed. The payee must be indicated or named on the instrument. A negotiable instrument is a transferable document that is signed by the authority to pay the bearer an amount of money on demand (Goel, 2019). Sometimes negotiable instruments trade on the secondary market, as they are assignable and transferable. Negotiable instruments allow the holder to utilise the cash appropriately regarding the transaction. The amount of the fund listed on document comprises notation in regards to the specific amount as well as need to be paid fully on-demand at the specified time (Goel, 2019). To make any instrument negotiable, it needs to be signed by the creator of an instrument or by the drawer of the funds. It includes bearer bonds, drafts and checks as well as few certificates regarding bank notes, promissory notes, and deposit certificates.
The transferring act of ownership regarding the negotiable instrument towards the other party is called Negotiation. If the owner owned the instrument, then he/she can negotiate the instrument. The owner can negotiate a “negotiable instrument” by signing on back of the instrument and deliver it to another party. A signature made by the owner on the back of an instrument before the delivery is known as an endorsement (Volkema & Kapoutsis, 2016). Once a negotiable instrument transferred through negotiation to parties, then these parties can acquire rights towards the instrument. Parties who receive the rights preferable to those of real owner are acknowledged as holders in due course. It is primarily this feature regarding the transfer of preferable rights, which provides negotiable instruments with an extraordinary classification (Volkema & Kapoutsis, 2016).
Demand instrument is the document, which provides a written statement by the drawer to the drawee for paying a specified amount. A negotiable statement payable on presentation with no specific time is also known as demand instrument. In this instrument, payment requires to be claimed before the supply of the product (Putra, Sabrie, & Thalib, 2018). Demand instruments usually regarded as payable at any time on the demand of the bearer. Some of the examples of demand instrument are bills of exchange and promissory notes. Demand instrument is the classification of Negotiable instrument.
The seven requirements of the negotiability are followed:
- It should be written as well as signed- Under the section of UCC 201, writing or written comprises typewriting or printing. As these are the tangible material, so the checks fulfil the requirement of the written statement (Volkema & Kapoutsis, 2016).
- Drawer or maker must sign the written paper- “Any symbol adopted or executed by the party with the current intention to validate writing” would serve under the UCC Section 1-201(39). It means that drawer or maker can compose an impression of self-signature with the rubber stamp. It could be thumbprint or typed. A suitable letterhead can offer to create the draft or note negotiable exclusive of another signature. Additionally, the signature might be in assumed name or trade name. It needs to be considered that particular problems happen when the negotiator signs on behalf of the principal.
- It should be an unconditional promise- UCC section 3-106 states that if an instrument expresses condition for paying, then it is not considered as negotiable. Under the UCC section, 3-106(b) the promise will not consider because of limited payment to alternate towards a particular source or fund. The only acceptable order or promise in the negotiable instrument is to pay the decided money. To achieve an indeterminate value instrument often become prevented as per the stated rule (Volkema & Kapoutsis, 2016).
- It should be a fixed amount regarding money- The instrument should call for payment. It needs to be “national medium of exchange” which is legal tender when payment placed. Therefore, it can be billed in rubles, pesos, pounds, Euros, yen and dollars.
- It should be paid on demand at a definite time- An instrument fulfils the negotiability test on specific time if it is to be paid on the demand (demand note) or sight (sight draft).
- It should be payable to bearer-. Negotiable instruments allow the holder to utilize the cash in an appropriate manner regarding the transaction. The amount of the fund listed on document comprises notation in regards to the specific amount as well as need to be paid fully on-demand at the specified time (Volkema & Kapoutsis, 2016).
- The drawee and payee should be designated to the reasonable certainty- When a negotiable instrument is payable “to order,” the bearer should be so named so that the particular party could be recognized with the reasonable certainty.
A draft includes a pay order such as check or trade acceptance. The word order means the instrument does not consider as limited to only an individual. Moreover, the payee of an instrument could designate anyone to receive a payment. It usually needs a recognised person to sign an instrument. Paper becomes bearer after the signing of an instrument (Goel, 2019). It is acknowledged that if the note is created for paying a specified person without “order”, it is not considered as negotiable. Therefore, if any draft does not include the word “order”, then it is considered as non-negotiable.
A reference towards the deliberation in the note, which does not state the promise, therefore cannot destroy negotiability. The article, “This note is provided in the thought of a typewriter purchased today,” cannot state the promise of the maker to pay. If the article interprets, “This note is provided in the thought for typewriter assured for ninety days, breach regarding warranty to comprise cancellation of note,” an instrument will not be then negotiable (Blums & Weigand, 2016,). This promise for paying is not considered as absolute, but as conditional. Also, if the presentation of the reflection is in such type to formulate the instrument matter to another contract, then the instrument’s negotiability being destroyed. Therefore, a few references towards a separate agreement, which the instrument occur out of separate agreement cannot build the order or promise conditional (Blums & Weigand, 2016). On the other hand, if an order or promise reveals that it is matter to or regulate by other agreement, then it is considered as conditional.
The promissory note is the legal negotiable financial instrument that is issued by one party (drawer). It is a duly written and signed instrument that promises to pay a sum of money unconditionally to any other person (drawee) either at a fixed date or on demand of the drawee. Therefore, the primary parties in a promissory note are the drawer and the drawee.
Drawer: The drawer or the issuer is the person who makes the promissory note. The drawer is accountable to make the note and promises to pay a certain amount of money. Therefore, he is also called the debtor or promisor. The promissory note can be created to pay mutually, where the amount is divided by the figure of drawees(Christoff, 2016).
Drawee: The drawee is another primary party in a promissory note who receives the money from debtor and thus, the drawee is also called the creditor.
Hence, the Drawee and the Payee could be a different person in case the amount is ordered to be paid to another person by the drawee. The drawee transfers the amount to another person, and the payee becomes different(Christoff, 2016).
Bond: A bond is a written and sealed contract from the institute that borrows the money for repaying to a company, a corporation or to the government. It comprises a promissory note to pay the interest against the debt in regular instalments (Llewellyn, 1944).
Collateral note:A collateral note is a promissory note that is protected with personal property. The note promises the specific property or resource for repaying an outstanding loan. The note is used for a mutual financial contract (wiseGEEK, 2019).
Real estate mortgage note:These types of mortgage notes are the kind of promissory notes, which are secured by a real estate property. The note promises for repaying the loans that were used to buy realestate properties in legal documentation. The note defines the terms of repayment, interest and duration(Ambrose,Sanders&Yavas,2016).
Debenture:This is a note or bond that is not secured by any asset. The money is transferred by payments on purchaser loans. This is used for long-term loans which need repayment in a fixed date. There is no collateral for it; thus, the unsecured notes and bonds are called debentures (Leong& Sung,2018).
Certificate of deposits: This is a short-term security deposit with a fixed rate of interest. The maturity date is issued by a bank, and the bank acknowledges for the receipt of money with the agreement of repayment(Llewellyn, 1944).
The time draft is used for international trading. This is a kind of credit that allows the trader a delayed payment after the acceptance of the goods or export shipments. The exporter or trader often receives an order from unknown importers who can only apply for the acceptance of a bank for payment (Laryea,2001). Therefore, the time draft is delayed to hold the payment until the date is specified for the importer to receive orders and confirmation. After the acceptance of goods, the exporter receives payment from the financial establishment of the bank and the importer.Therefore,it is must the time draft payable a specified amount of times after the assetsare presented for acceptance because the due date is calculated after the goods or assets are verified and accepted by the buyer. Hence, it allows for the delay but needs immediate payment after the specified time(Hopkins, 2017).
In simple words, the indorsement is the signature of a person on any of the negotiable instrument. The instruments could be a promissory note or a cheque.This is the act of the drawee or the creditor, a bill holder, in signing his or her name in the back of the same instrument, whereby the assets in the same is assigned and transferred by someone other.(Ashcroft & Ashcroft, 2010)Indorsement is a kind of negotiable instrument,which are impacted by the transfer of rights that are represented by the specific instrument to an individual. In the process of indorsement,the payee or the owner of the instruments writes his or her name in the back of a bill, note, draft or cheque to make it payable to another person or make it cashable by other people. This could be made after a definite direction, which is a qualified endorsement. Indorsement without any designation for a specific drawee is called a blank endorsement that makes the instrument payable to the holder (The Law Dictionary, 2019).
In its literal term, indorse or endorse defines the meaning of “on the back of,” therefore the indorsements are usually placed on the back of any instrument. But in its formal placement, an indorsement could be placed on an extra piece of a formal paper, which is affixed with the main instrument. The attachments are called “allonge”as it comes along with the instruments(Ashcroft & Ashcroft, 2010).
Placement of Indorsement
There are some definite rules for placing the indorsements. The “Expediated Funds Availability Act, 1987” passed for the commercial banks to regulate the use of institutions for deposit holds. The specific criteria have been made thereby to improve the fund transfer and accelerate the cheque returns. The indorsements need to be made within one and half inches of the left edge on the back of the cheque and the remaining space will be used for a blank endorsement.The indorsement is supposed not to interfere the magnetic characters, which is the MICR code on a cheque or draft, thereby prohibited on the front side and uses the back or an allonge(“Indorsements”, n.d.).
This is very often; negotiable instruments are issued to multiple payees. Therefore, there are different rules regarding the indorsement. The rules depend on the precise language used for naming the payees in the instrument.
If the payees are named and separated using “And” between the names, in that case, the instrument is payable mutually. “And” refers to each member in the list, and not a specific one. Therefore, all payees need to indorse the instrument on its back, to negotiate it. Neither of the payees can exchange the instrument on his/her own(Ashcroft & Ashcroft, 2010).
If the names are listed using “Or” between the names, the instrument becomes negotiable by anyone of the enlisted parties. Each member plays an alternative role for others to negotiate. Therefore, anyone of the enlisted parties can indorse the instrument to exchange it.
If it is not clearly mentioned whether the instrument is payable mutually or alternatively, the bank can decide the procedure of indorsement. Generally, this kind of instruments is understood to be payable alternatively(Ashcroft & Ashcroft, 2010).
The uniform commercial code, basically known as UCC, does some imposition on parties to negotiable instruments under its some factors (Goldberg, 2018). The imposition of liability depends on the role of the party as a maker, the nature of paper, transferor, acceptor and satisfaction regarding individual needs. The above factors generally conducted by the holder of the negotiable instrument (Williams, 2017).
The secondary liabilities rely on the negotiable instruments that are not obliged to pay unless it’s get dishonored and presented for the transaction. It can be said that some conditions are required to meet for the party to be held the secondary liable (Goger, 2017). The conditions include:
- The dishonored instruments
- The instruments need to present appropriately for the payment
- The notice regarding dishonored should be given to the particular party to be held the secondary liable
- The notice of dishonored needs to maintain the timing
The negotiable instruments are underlying the conditions of presenting proper payment from the acceptor. As per the issues regarding the basic rule of negotiable instruments, the secondary liability gets held. These negotiable instrument needs to dishonored specifically in terms of ”Uniform Commercial Code’ (Goger, 2017). Furthermore, the methods of protection for a party ensure the secondary liability in which the instruments are considered as null. It is worth mentioning the fact that more than one party is considered as eligible for obtaining payment. Between the two parties, only one of them gets notified regarding their secondarily liable status (Goger, 2017).
A holder of an instrument requires some primary requirements for qualifying as a holder. The terms are as follow:
Good Faith– The holder requires to receive the instrument in good faith. The instrument in good faith means that the holders are not intended to defrauding anyone in order to receive the instrument (Özdilli & Erdin, 2018). The number of schemes that get by the transferor would transform the law by transferring the instrument. As a result, the holder receives the right for repayment.
Value-Value is considered as a primary requirement as it takes the instrument to add its value. The holder is suggested to provide goods or money for the instrument. It is worth mentioning the fact that the transfer is not acceptable by inheritance (Özdilli & Erdin, 2018).
Unaware of Defenses-the holder does not have the notice regarding valid defense for enforcement. It is seen that the unaware of defenses basically deemed to be an actual notice (Özdilli & Erdin, 2018). The constructive advice from the situation has the ability to disqualify the individual as well.
In a deal of agency, it is seen that there still three parties get involved when an agent enters into an agreement for the principal (Peters & Panayi, 2016). While the principal gets disclosed, an agent consists of a contract from his behalf. The contract between the third party and the principal carry the obligations and rights between them. As a result, the legal effect remains the same with this contract. Such a contract is considered as the same as principal directly contracts with the third party (Peters & Panayi, 2016). It is noteworthy that, legal effect acts as a scope of actual authority of a collective agent. The appearance of this authority gets bind on the principal. Hence, the hidden restrictions related to the agent power do not bind the third party. However, the involvement of third-party sues the principal instead of the agent. While an agent enters into a contract for the principal, the third party refuses to fulfill the contract if he has the previous information regarding the agent who is not the principal (Peters & Panayi, 2016).
All acts can be alto to delegate to an agent. As an example, an agent cannot be considered as a substitute for a principal during signature in a will, voting in the public election and making an oath-taking the statement (Habla & Winkler, 2018). Every delegation carries the implied authority in which all the acts have done ordinarily and naturally. The significant influence provides some effects that are necessary reasonable. An agent who has the power of authority executes himself and cannot delegates all the acts. It is seen that all the acts implied and dominated the agent. Hence, the principal expresses to allow the acts to be delegated to an agent (Habla & Winkler, 2018). Not all the acts get delegated to an agent. The acts that are routine by nature and can be done by the agent are considered as commissioned. However, under certain circumstances the agent delegates some of his power to a substituted agent. As a general rule, the courts do not permit individual acts to be delegated to an agent. Some of these acts do not get opposed to social welfare (Habla & Winkler, 2018).
A general agent is considered authorized for carrying out all the business principles (Mailath, Morris & Postlewaite, 2017). On the contrary, the general agent contains considerable authority beyond the contractual statement as well as expressing the higher authority. This general agent has the authority in such as a circumstance of a consumer has. As a rule, the general agent has the authority for transacting the several classes of acts (Mailath, Morris & Postlewaite, 2017). Not only that, the general agent expressly delegates by the agreements in which the authority gets ”expressed’. The express authorization is considered as the amount of power for doing whatever the general agents appointed to do. The authority receives by a principal in which the general agent implicates this principal. As a result, effective execution becomes essential as a usual way (Mailath, Morris & Postlewaite, 2017). Hence, the real ”Authority’ consent the actual amount that a general agent has in addition to express authority.
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