(i) “traveller`s cheque” means an instrument that (i) is payable on demand, (ii) is used or payable with or through a bank, (iii) is referred to as a “traveller`s cheque” or substantially similar term and (iv) requires a countersignature as a condition of payment from a person whose signature appears on the document. This policy also affects the fact that almost all controls today are read by machines, not humans. There is no one to see that the printed form does not contain the special words, and the meaning of the words is recognized by very few people. In short, it does not matter for controls. Whether or not a document is negotiable is the first of our four major questions, and it is a question that non-lawyers must face. Chartered accountants, retailers and financial institutions often deal with notes and cheques, and usually have to make quick judgments about negotiability. If the required elements of §§ 3-103 and 3-104 of the Uniform Commercial Code (UDC) are not completed, the paper is not negotiable. Thus, paper meets the following criteria: (h) “bank draft” is a bill of exchange issued by a bank: (i) to another bank or (ii) payable to or through a bank. (c) An arrangement that meets all the requirements of subparagraph (a), except paragraph 1, and otherwise falls within the definition of “control” in subparagraph (f) is a negotiable instrument and control. Article 1-201(24) of the UCC defines currency as “a medium of exchange approved or accepted by a domestic or foreign government as part of its currency.” As long as the medium of exchange was such at the time of the manufacture of the instrument, it is payable in money, even if the medium of exchange was abolished at the time of the maturity of the instrument.
Article 3-107 provides for payments in foreign currencies: “Except as otherwise provided in the instrument, an instrument indicating the amount payable in foreign funds may be paid in foreign currency or an equivalent amount in dollars calculated using the prevailing spot rate offered by the Bank instead of payment for the purchase of dollars on the date of payment of the instrument.” (g) “cashier`s cheque” means a bill of exchange: where the subscriber and beneficiary are the same bank or branch of the same bank. (f) “cheque” means (i) a cheque, other than a bill of exchange, payable on demand and made payable to a bank, or (ii) a bank cheque or a bank cheque. An instrument can be a cheque, even if it is described on the front with another term such as “money order”. The only promise or order admissible in a negotiable instrument is to pay a certain amount of money. Any other promise or order voids the negotiability. The reason for this rule is to prevent an instrument from having an indeterminate value. The usefulness of a negotiable instrument as a substitute for money would be seriously undermined if the holder of the instrument had to investigate whether a provision or condition had been satisfied before the thing had any value (i.e. before the debtor`s payment obligation had matured). The rules just mentioned are the conditions for the ability to negotiate. The treatment of two additional details – missing terms or ambiguous terms – completes the picture. Despite the presence of readily available form tools, people sometimes omit words or create confusing documents.
A practical difference between a demand instrument and a temporal instrument is the date on which the limitation period begins to run. (A limitation period is a limitation on the time within which a creditor must take legal action to collect the debt.) Article 3-118(1) of the UCC states that an action for enforcement of a payment at a particular time must be brought “within six years after the due date” (or the accelerated due date).