Commercial Papers - Appendix C (Definitions)

Transcription

1. Shari ’ah Standard No. (16): Commercial Papers Appendix (C) Definitions Commercial Papers Tradable certificates that represent pecuniary rights payable at sight or after a short period. Customary practice regards them as instruments of payment and they act as substitutes for cash in transactions. Bill of Exchange A certificate issued in a particular legal form. It consists of an order from a person (known as the drawer) to another person (known as the drawee) to pay a certain sum of money at sight, or at a particular or determinable date, to a third person (called the beneficiary). Promissory Note A certificate whereby the issuer promises to pay a certain sum of money at a particular or determinable date, or at sight, to another person (called the beneficiary). Cheque A certificate that is issued in a particular form containing an order issued by a person (known as the payer) to another person (known as the payee) to pay a certain sum of money to a third person (known as the beneficiary) when the cheque is presented. Crossed Cheque A cheque written in the form of an ordinary cheque except that it is distinguished by two parallel lines on the face of the cheque. The crossing places an obligation upon the payee bank not to pay the value of the cheque to a person other than a client of the payee bank or to another bank. 459
2. Shari ’ah Standard No. (16): Commercial Papers Certified Cheque A cheque written in the form of an ordinary cheque and distinguished by the word “certified” or “accepted” or whatever gives this meaning, on the face of the cheque along with the date and the address of the payee bank with the signatures of the certifying official whereby the payee bank certifies the authenticity of the signature of the payer and the existence of sufficient funds in his account for payment of the value of the cheque to the beneficiary. Banker’s Cheque (Bank Draft) A cheque issued by the payee bank (to its client) guaranteeing payment of the value of the cheque to a third party. Account Payee Cheque A cheque written in the form of an ordinary cheque to which the issuer adds a statement indicating that its value should not be paid in cash, but upon conditions stated, like a statement written on the face of the cheque saying “Account Payee” or any other statement bearing the same meaning. Travellers’ Cheque Cheques drawn in varying values by institutions upon their foreign branches or correspondent institutions in the interest of a traveller who will receive their value by merely presenting them for payment to a party that will accept them. Cheques for Bank Transfers A cheque written by an institution, upon the request of a person, who intends to remit his cash through the institution, by way of cheques, to another location, so that he, his agent, or any other person may receive it. Endorsement A legal act by means of which ownership in the commercial paper is transferred from one person (known as endorser) to another person (known as the endorsee), or it has the effect, through a statement, of creating an agency for collection or a mortgage. 460
3. Shari ’ah Standard No. (16): Commercial Papers Discounting of Commercial Papers A process by means of which the holder of commercial paper, through an endorsement, transfers ownership in it to a third party prior to the date of maturity with the institution discounting the value by a determined amount in lieu of early payment. Acceptance to Pay The undertaking by the drawee to pay the value of the bill of exchange to the lawful holder at the date of its maturity. Guarantee or Guarantor The bank as guarantor provides a guarantee to the holder for paying the value of the commercial paper by way of a guarantor along with other signatories if the primary debtor refuses to pay. Tangible Guarantees These are guarantees stipulated by the holder of commercial paper through the creation of a mortgage on real estate, or a mortgage of movables, like commercial paper or negotiable instruments that the debtor endorses over to the holder by way of mortgage or goods that the debtor delivers to the holder as a security for payment. 461