words they bear interest from maturity, if they remain unpaid through the fault of the maker.

67. When will interest cease at maturity?

When an interest-bearing note remains unpaid through the fault of the holder, interest ceases at maturity.

The Bill of Exchange or Draft.

68. What is a bill of exchange or draft?

A bill of exchange or draft is a written order drawn by one person on another, requiring the person upon whom it is drawn to pay on demand or at a specified time a certain sum in money to a person named therein, to order or to bearer.

69. What are the parties to a bill of exchange?

The original parties are drawer, drawee and payee. The drawee does not become a party to the bill until he accepts it.

70. What party may act in two capacities?

The drawer may make himself the payee of the draft.

71. Into how many general classes are bills of exchange divided?

Into two classes: foreign and inland. If the drawer and drawee reside in the same country or state it is regarded as an inland bill; if they reside in different countries or states it is considered a foreign bill.

72. How are foreign bills usually drawn:

They are usually drawn in sets of three, each of the same date and tenor. They are sent at different times and by different routes so that in case of accident some one will surely reach its destination. Only one of the set should be accepted and only one indorsed and negotiated.

73. In how many ways may drafts be drawn as to time? In seven ways, viz: at sight, after sight; on demand, after demand; on a given date, on or before à given date, and after date.

74. For what purpose are drafts drawn?

Drafts are drawn to pay debts without unnecessarily transmitting money from city to city, thus saving expense and the risk of loss in such transfer; they also serve as an excellent medium for making collections.

75. What is the theory on which a draft or bill of exchange is drawn?

Drafts are drawn on the theory that there is money in the hands of the drawee belonging to the drawer which the drawer wishes transferred to the payee; or that the drawee owes the drawer and the drawer owes the payee. This theory is not always followed, for drafts are often drawn for accommodation.

76. Upon whom may a bill be drawn?

Upon an individual, or upon two or more persons who are partners, or upon two or more jointly who are not partners, or upon a corporation.

77. What bill must be presented for acceptance and why?

Bills drawn "after sight" or "after demand" must be presented for acceptance in reasonable time, (1) in order to fix the day of maturity and (2) in order to retain the right of action against the drawer and indorsers (if any) in case of dishonor. See No. 102.

78. Should other time drafts be presented for acceptance? It is good business practice to present all time drafts for acceptance, but it is not required by law except as specified in Nos. 77 and 102.

79. For what are sight drafts presented?

In New York sight drafts are presented just once, for payment. In some states, where days of grace are allowed on sight paper, they must be presented for acceptance and afterwards for payment.

80. What is meant by acceptance?

Acceptance is an undertaking by the drawee in favor of the holder to pay the bill according to the tenor of the bili or the tenor of his acceptance. The acceptance must be in writing and signed by the acceptor. It is usually written. across the face of the bill with red ink. The obligation assumed by the acceptor is similar to that assumed by the maker of a note.

81. Name the common forms of acceptance. The absolute or general and the qualified.

82. What is a general or absolute acceptance?

It is an acceptance according to the tenor of the bill without qualification. In such acceptance a place of payment can be specified, but payment must not be restricted to that place.

The following is a general acceptance: "Accepted Sept. 2, 1901.

Payable at City National Bank.

A. W. Brown."

83. What is a qualified acceptance?

It is an acceptance which qualifies the tenor of the bill. It may contain a condition, may contain a promise to pay only part of the bill, or to pay only at a particular place, or it may be qualified as to time.

Forms: (1) "Accepted Sept. 2, 1901.

Payable if I have sufficient funds belonging to the drawer at maturity.

(2) "Accepted Sept. 2, 1901.

A. W. Brown."

Payable out of the proceeds of my shipment to W. J. Atkins & Co., New York.

A. W. Brown."

84. Is the holder compelled to take a qualified acceptance?

No; he may refuse to take such acceptance and if an unqualified acceptance is not given he may treat the bill as dishonored.

85. What is the effect of taking a qualified acceptance? If the holder take a qualified acceptance he relinquishes his claim on the drawer and endorsers unless they have assented to such action. If the holder notify the drawer or indorsers that the bill has been accepted conditionally, they should express their dissent to such action in reasonable time or their neglect to do so may bind them.

86. Can the holder require the acceptance on the face of the bill?

Yes, and if such request is refused he may treat the bili as dishonored.

87. To what extent does the acceptance written on paper other than the bill itself bind the acceptor?

He is bound only to such persons to whom the acceptance was shown and who received the bill on the faith thereof.

88. What is meant by a collateral acceptance?

It is an unconditional written promise to accept a bili before it is drawn. It is deemed an actual acceptance in favor of every person who, upon the faith thereof, receives the bill for value.

89. What time is allowed the drawee to accept the bill? He is allowed twenty-four hours after presentment in which to decide whether he will accept the bill; the acceptance, if given, dates as of the day of presentment.

90. What is the effect if the drawee retain the bill for a longer period than that allowed by the holder, or if he destroy it?

If he fail to return it promptly or if he destroy it, he will be deemed to have accepted it.

91. What is the liability of the drawer of a draft?

(1) He admits the existence of the payee and his then capacity to endorse; and

(2) he engages that on due presentment, when presentment for acceptance is necessary, it will be accepted absolutely,

(3) and that it will be paid when due, and

(4) that if it be dishonored in either case and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder.

92. To whom is this warranty given?

To the payee and also to every subsequent holder in due

course.

93. Can the drawer limit his liability?

Yes; he may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. 94. What is the liability of the acceptor?

1. He engages that he will pay it according to the tenor of his acceptance; he becomes the principal debtor.

2. He admits the existence of the drawer, the genuineness of his signature and his capacity and authority to draw the instrument.

3. He admits the existence of the payee and his then capacity to endorse.

95. For what is he not responsible?

He is not responsible for any defect in the instrument, nor does he admit that the indorsements are genuine.

96. What does the transferrer of an instrument by delivery warrant?

He warrants:

I. That the instrument is genuine and is in all respects what it purports to be;

2. That he has a good title to it;

3. That prior parties had capacity to contract;

4. That he has no knowledge of any fact that would impair the validity of the instrument.

97. To whom does he give this warranty?

To the immediate transferee, but it does not extend to subsequent holders.

98. What does the indorser of a draft before acceptance warrant?

His contract is the same as that of the drawer, but in addition he warrants the genuineness of the instrument and the genuineness of the signature of prior parties. See

No. 91.

99. What does the indorser of a draft after acceptance warrant?