Instruments Of Payment

Class:

4B1

Date:

7th February, 2011

Subject:

Principles of Business

Submitted by:

Marcelo Novelo

Submitted to:

Mrs. Elvi Brown

Table of Content Title

Pg #

Legal Tender

1

Money Order

2

Bank Draft

3

Telegraphic Money Order

4

Credit Card

5

Cheques

6

Letter of Credit

7

Bill of exchange

8

Promissory Note

9

Documentary Credit

10

Legal Tender Legal Tender is a term used to determine whether money or a monetary instrument is officially legal of legally sanctioned, and does not denote a method of payment. Bank notes and coins are usually the highest denomination of legal tender up to any amount. In many countries cheques, postal orders and money orders are not legal tender. Examples of Legal Tender are:

Money Order A money order is a bank cheque bought for a fee from a bank, signed by the bank manager, and stateing the sum to be paid to a named person. Examples of Money Order are:

Bank Draft A bank draft is also a manager’s cheque which is bought from bank for large sums of money withdrawn from the individual’s own bank account. Examples of a Bank Draft:

Telegraphic Money Order A telegraphic money orders or moneygrams are used to pay for goods from overseas and to send money to families over seas. Examples of Telegraphic Money Orders:

Credit Card Credit Cards or plastic money is a small plastic card issued to users as a system of payment. It allows its holder to buy goods and services based on the holder's promise to pay for these goods and services.[ Examples of Credit Cards:

Cheques A cheque is not money but an order or instruction to your bank to pay money from your account there too the person you specify on the cheque or to the bearer exactly like a bill of exchange. Examples of a Cheque are:

Letter of Credit A letter of credit is a document issued mostly by a financial institution, used primarily in trade finance, which usually provides an irrevocable payment undertaking. The letter of credit can also be source of payment for a transaction, meaning that redeeming the letter of credit will pay an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. Examples of a letter of credit are:

Bill of Exchange A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it making the person to whom it is addressed to pay on demand or at a fixed time. Examples of a bill of exchange are:

Promissory Note A promissory note is an unconditonl promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time a sum of money. Examples of a promissory note are:

Documentary Credit A documentary credit is used as relatively secure instruments of payment in international trade and offer more security to the buyer than payment in advance and more security to the exporter than either open-account trading in which goods are sent an invoices are settled on receipt in which the exporter releases documents of title on the buyers acceptance of a term bill or note. Examples of a documentary credit: