when he has a definite record of his obligations and as to when they mature that he cannot overstock or overbuy without knowing where the money is coming from to pay for the Acceptances he gives for such purchases; and training him to be a more careful and intelligent buyer is bound to be reflected in his profits at the end of the year. Furthermore, it will check any tendency to use commercial credit as fixed capital, and this may save serious embarrassment at some time when credit relations with his banker are strained or not available just at the time when his creditors are insisting upon payment of obligations owing them.

The buyer is also trained to be a better collector; because he must meet certain definite obligations on certain definite dates he will require his customers to pay him their accounts so that he may meet his own maturing obligations, thus reducing his losses, as the more prompt collections are the less the hazard and the less the ultimate loss in bad accounts.

Either the National Association of Credit Men or the American Trade Acceptance Council will furnish all those inquiring with approved and satisfactory forms of Trade Acceptance literature that is helpful in conducting an educational campaign, and booklets, or the names of banks issuing booklets, on the subject, that are very instructive and interesting.

CHAPTER XI

GENERAL KNOWLEDGE OF LAW AND INFORMATION ON CREDIT CONDITIONS

It is very helpful to a credit man to have a general knowledge of commercial law, particularly that respecting the collection of obligations and respecting contingent liabilities. This is especially so if the credit man is in charge of the collection department. The main items with which a credit man should acquaint himself are laws relating to:

Exemptions,

Mortgages, both real and chattel,
Deeds,

Taxes,

Claims against estates,

Conditional sales,

Promissory notes,

Collateral notes,

Endorsements,

Acknowledgments,

Affidavits,

Assignments,

Attachments,

Community interests,

Dower rights,
Limitations,

Mechanic's liens,

Interest,

Judgments,

Deeds of trust,

Redemption,

Replevin,

Bulk sales law,

Warehouse receipts,

Bills of lading,

Wills,

Supplementary proceedings,
Bankruptcy,

It is not very satisfactory to be compelled to consult a lawyer concerning the ordinary affairs of commercial life, and while it is not desirable or necessary for a credit man to act entirely as an attorney for his employer, it is desirable that he be sufficiently acquainted with these matters to enable him to pass judgment on the ordinary case.

As a rule an attorney is not a good business man, but if a credit man knows the practical operation of the laws of the states in his territory, a claim will be in proper shape when it goes to an attorney, if it ever reaches one. For instance, if the average attorney is consulted as to the liability of an endorser, he will tell you whether or not the note must be protested, but a

shrewd credit man will not consult an attorney on that point, but will have notes prepared with a printed waiver on the back thereof. Occasionally banks will fail to protest a note, even if instructed to do so, but if your promissory note forms have printed across the back thereof a statement that presentment, protest, notice of protest and demand are waived, and that an extension may be granted without notice to the undersigned, it will not be necessary to instruct banks to protest, the endorser in that case being liable without protest.

Likewise, if a credit man is familiar with the laws relating to chattel mortgages, he will know when a chattel mortgage is received whether it is in proper form. He will know whether or not any rights are lost failing to foreclose or take possession of the property promptly at maturity date. He will protect himself by taking the form of collateral note that permits the holder thereof to sell the security without any advertisement, demand or notice, instead of the usual form without such a waiver, requiring the holder thereof to proceed to sell the property, as in the case of a pledge.

By familiarizing himself with these general subjects, he will know what assets to strike out of a statement that are exempt. In many statements rendered by applicants for credit there is included the value of their home, which in most states is absolutely exempt. It is usually not very difficult to obtain a copy of the

statutes, or some simple form of publication covering all these points.

By having this information before you, you are prepared to act promptly. Should one of your debtors become deceased, you can readily ascertain what the requirements are with reference to filing claims against the estate, and, in fact, by obtaining the blank form of claims against estates, you can fill it out and file it with the administrator, or do whatever is necessary to put it in line for payment without the necessity of consulting an attorney or incurring the expense of attorneys' fees and maintain your own control over the obligation, as well.

A knowledge of the operation of the bankruptcy laws is also desirable, and this can be obtained from a number of books on bankruptcy published for just such purpose and thoroughly indexed, from which a credit man can get all the practical information necessary concerning bankrupt estates and bankruptcy claims. A separate chapter will be devoted to the subject of bankruptcy in Part II of this book.

A credit man should realize the extent to which the goods sold by the house are guaranteed or warranted. Even in the absence of any guarantee or warranty there is always an implied warranty that the goods sold are sound and merchantable and free from defects. It is very important in selling machinery to limit this guarantee or warranty to the replacement of defective parts