Bahir Dar University

School of Law
Law of Banking, Insurance and Negotiable Instruments Course Syllabus
Law of Banking, Insurance and Negotiable Instruments
Course Academic Year: 2014 E.C
Information Semester: II
Class Schedule: Friday 7:30 - 11:30 AM

Instructor Name: Abeselom T.

Information Title: Asst. Lecturer (LL.B)
Office Location: Staff Building Office
Consultation Hours: Thursday 2:00- 3:30 and Wednesday 3:30-6:00 (local time)
Email: abeselomtebejee88@gmail.com
ECTS 7

Student Work-

and
Load

Independent study

final Assessment
Problem-solving

Project works

Presentation

Continuous
Tutorials,
Lectures

sessions

Total
3 1 5 5

Course The Law of Banking, Insurance and Negotiable Instruments is among the financial laws
Description in Ethiopia. It governs the nature and function of negotiable instruments, banks and
insurances.
The law that governs negotiable instruments address issues relating to documents or
papers incorporating various types of rights that are transferred by mere delivery or
endorsement followed by delivery. The Ethiopian Commercial Code recognizes three
classes of documents as negotiable instruments: commercial instruments (bills of
exchange, promissory notes, checks, travellers’ checks); transferable securities (shares
or stocks, bonds); and documents of title to goods (bills of lading and other types of
way bills, ware house goods’ deposit certificates). However, the focus in this course
would be on the first class of negotiable instruments.
The course also deals with banks and banking transactions. This part covers such
banking activities as accepting money, valuable things and documents on deposit,
lending money accepted on deposit, depositing and managing securities, buying and
selling foreign exchanges, gold and silver bullions, and discounting commercial
instruments and transferable securities having a future maturity date.
This course covers also that part of financial law governing Insurance. Insurance is an
area of financial Law governing the nature and function of insurance. It basically deals
with the definition and types of insurance, the requirements for the formation of a valid
contract of insurance, the requirements for the establishment and operation of an
insurance business, the basic principles governing insurance contracts and the rights
and duties of the parties to the insurance contract. It begins with a highlight on laws
regulating the establishment and operation of the insurance business and proceeds to
sections that deal with the law determining the rights and duties of the insurer and
insured in insurance contracts as embodied in the Ethiopian Commercial Code.
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Objectives & After a successful completion of the course, students are expected to achieve basic
Competence knowledge and competence regarding:
Achieved  the blue print of banks, banking transactions and major banking operations;
 the legal aspects of negotiable instruments, the definition and types of
negotiable instruments;
 the similarity and differences between and among bills of exchange, cheques,
and promissory notes;
 the economic significance of negotiable instruments; the formal requirements
for the issuance and circulation of valid negotiable instruments; the mode of
transfer of negotiable instruments; the definition, form and effect of
endorsements;
 the definition, form and effects of acceptance, acceptance for honor and
payment or acceptance by intervention or for honor of negotiable instruments;
 the rights and duties of the parties to negotiable instruments; the performance
of obligations arising out of negotiable instruments; the remedies available to
holders of negotiable instruments in cases of non-performance;
 the specific legal requirements for the establishment and operation of banking
business;
 the economic significance of banks, the various types of banks, i.e., commercial
banks and central or national banks and their functions, the powers and duties
of central or national banks;
 the various types of banking transactions or operations such as deposit of
funds, bank transfers, deposit and management of securities, lending, deposit
of valuable things and documents, discount of commercial instruments and
securities;
 the rights and duties of banks and their customers;
 The nature, definition and types of insurance, the requirements for the
formation of a valid contract of insurance.
 The requirements for the establishment and operation of an insurance
business, the basic principles governing insurance contracts, and the rights and
duties of the parties to the contract.
 the legal elements of insurance law, the establishment and operation of
insurance companies, the concept and requisites of insurable interest, the
concept of indemnity and utmost good faith, the commencement and duration
of insurance contract, and the claim and settlement of issues in relation to
insurance.

Pre-requisite None

Course Status Mandatory

Contact Hours Chapters to be Covered Readings

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Week 1 Part 1  Fasil & Merhatbeb,
Chapter I: Introduction to Negotiable Instruments pp.71-78
1.1. Definition/ Meaning  The Civil Code Arts.
1.2. Nature ,purpose & characteristics of Negotiable 2441, 1962, 1966-7,
Instruments 1974, 2813-2824.
1.3. Types of Negotiable Instruments  The commercial Code
1.3.1. Commercial Instruments Arts.715, 716, 732, 510(3),
1.3.2. Transferable securities 912, 340-342, 429-434, 570-
1.3.3. Documents of Title to Goods 574, 579, 610, 616, 621
1.4. Forms of Negotiable Instruments
1.5. The modes of negotiation/transfer of negotiable  Sen & Mitea,
instruments Commercial
1.6. The concept of endorsement and its effect Law),pp.287-292
1.7. Obligations arising out of Negotiable  Richardson, PP.15-
Instruments 25. Hashim Tewfik,
1.8. Holder Vs. Debtor Senior thesis, 1988
1.9. Defenses available to persons sued on
Negotiable Instruments
1.10. Holder in due course and the limited scope
of valid defenses
Week 2 Chapter II: The Form of Bills of Exchange and the  Comm. code Arts.
parties 735-745., 756--
2.1. Maturity Dates of Bills of Exchange 779, 802-810, 780-
2.2. Negotiation of Bills of Exchange 801.
2.3. Presentment for Acceptance Bills of  Fasil&Merhatbeb),
Exchange PP.79-114
2.4. Presentment and Payment of Bills of  Sen & Mitra,
Exchange Commercial Law,
2.5. Intervention for Honour pp.292-343
2.6. Dishonour and Right of Recourse for Richardson, PP.42-
Non-acceptance or non-payment 61
2.7. Liability of parties and available
defenses
2.8. Loss of right of recourse and alternative
remedies to a holder

Week 2 Chapter III: The form of Promissory Notes and the  Comm. Code Arts.
parties 823-826.
3.1. Maturity dates  Fasil &
3.2. Negotiation Merhatbeb ,pp.80
3.3. Presentment and payment of -83
promissory Notes  Sen & Mitra.
3.4. Intervention for honour Commercial Law).
3.5. Recourse for non-acceptance or non- Pp 289-292.
payment

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Week 3 Chapter IV: The form of cheques and parties to it  Comm.Code
4.1. Negotiation Arte. 827-886.
4.2. Certification  Fasil&Merhatbeb
4.3. Crossed cheques and cheques payable ,pp.83-85
in account  Sen &Mitra,
4.4. Recourse for non-payment Commercial Law,
4.5. Travelers’ Cheques pp. 294-299.

Week 4 Part 2  Fasil

Chapter I: Law of Banking &Merhatibeb pp
4.1. Definitions 5-30,32-34,38
4.2. The Development of Banking Systems  Fasil
4.3. Types of Banks &Merhatibeb pp
4.4. Major Banking Transactions 5-30,32-34,38
4.4.1. Deposit of funds  Comm. Code
4.4.2. Bank Transfers Arts. 896-967.
4.4.3. Deposit of securities  Fasil &
4.4.4. Hiring of safes Merhatibeb
4.4.5. Discount pp.53-70
4.4.6. Bank lending
4.4.7. Documentary credits

Week 5 Part 3 John F.Dobbyn, pp.1-5;

Chapter I- Insurance in General Fasil Alemayeu and Merhatb
eb Teklemedhn, pp 115-
 The notion of Insurance. 120,124-53; Colinvaux
 Insurance vs. Wagering/Gambling contracts. Raoul, Valume 1 3rd ed.p.1-
 Significance of Insurance 58; Comm.Code
 Basic principles of Insurance arts.654, 666-688,713-714.

Week 5 Chapter II - The Regulation of Insurance Business  Comm.code

arts.654-674, 719,
 Types of insurances 724-725
 Contract of insurance and insurance policy.  Proc.No. 521/2008
 Parties to contract of insurance.  Fasil &Merhatibeb/
 General obligations and rights of the parties  Colinvaux
Raoul,pp.121-127
 Dobbyn, pp.6-54.

Week 5 Chapter III - Insurance of objects  Comm.code

 Who may insure an object: the requirement arts.675-688;
of direct/indirect interest?  Fasil & Merhatibeb/
 Scope of risks covered pp.163-177
 Scope of compensation/issues of under  Colinvaux
insurance and over insurance Raoul,pp.283-342

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Week 6 Chapter IV - Liability insurance in general  Comm.code
 The compulsory third party liability vehicle arts.675-688,
insurance  Fasil & Merhatibeb/
 Payment and right of substitution in pp.163-177
insurance of damages  Colinvaux
Raoul,pp.283-342
Week 6 chapter V – Life insurance  Colinvaux v.II.pp
 Insurable interest 231-286
 The nature and scope of risks insured.  Fasil & Merhatibeb
 Designation of beneficiaries pp.163-167
 Rights and obligations of parties  B.s Bodla pp. 113-
 Insurance against illness and accident 129
 Comm.code arts.
689-712
 Amdebirhan
Ayalew, pp.180-
222.
 John F.Dobbyn,
pp.7-42
Methods of Lectures, seminars, student presentations, group discussions, individual and group
Delivery tutorials, assignments and project supervisions.

Assessment The performance of students shall be evaluated based on the University’s

assessment regulation. In Particular, it will at least constitute the following activities.
For Lecture
 Attendance and Class Participation……..10%
 Test/Case Comment……………………..10%
 Quiz ……………………………………..10%
 Assignment………………………………10%
 Mid Exam…………..……………………20 %
 Final Exam…………..…………………..40%
N.B. Note that only students who comply with the university’s attendance policy
shall sit for a final examination.

References  Fasil Alemayehu and Merhatebeb Teklemdhin, Law Banking, Negotiable and
Instruments and Insurance, Teaching Material, Sponsored by the Justice and
Legal System Research Institute, 2009
 ገዙ አየለ፡ የኢትዮጵያ የባንክና የሚተላለፉ የንግድ ሰነዶች ሕግ፡ አዲስ አበባ፡ ኢትዮጵያ፡
2009 ዓ.ም.
 Hashim Tewfik, Defenses on Negotiable Instruments under the Ethiopian
Commercial Code, senior thesis, 1988
 Arun Kumar Sen&Jitendra Kummar Mitra, Commercial Law, The World
Press Private Limited, 2002
 B.M. Lall Kingam, Banking Law and Practice, Vikas Publishing House Pvt Ltd,
1986
 Bradford Stone, Uniform Commercial Code in a Nutshell, Fourth Edition,
West Group 1995
 David Cox, Success in Elements of Banking, Fourth Ed.1988.
 Dudley Richardson, Guide to Negotiable Instruments and the Bills of
Exchange Acts, London Betterworths, 7th ed., 1983
 J. Milnes Holden, The law and practice of banking, Vol. 1, Banker and
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 Customer, The Pitman Press, Bath, 1970
 J.E. Kelly, Practice of Banking, Second Ed. 1986
 M.C.kuchhal, Mercantile Law, Second Revised Ed., Vikas Publishing House,
1978
 P.J.M. Fidler, Sheldon and Fidler’s Practice and Law of Banking, Eleventh
Ed., 1982
 Richard E. Speidel and Steve H. Nickles, Negotiable Instruments and Check
Collection, Fourth Ed.1993
 The Civil Code of the Empire of Ethiopia, Proclamation No 165/1960
 The Commercial Code of the Empire of Ethiopia, Proclamation No 166/1960
 Banking Business Proclamation No. 522/2008.
 Amdebirhan Ayalew, Law of Insurance, Bahir Dar University, Module for
Distance Students, 2008
 Awash International Bank S.C. and Awash Insurance Company S.C., 10 TH
Anniversary Special Publication, June 2005
 B.S. Bodla,M.C.Garg&K.p. Singh Insurance, Fundamentals, Environment &
procedures, Deep& Deep publication Limited,2004
 Colinvaux Raoul, The Law of Insurance Volume 1&II 3rd ed, Sweet
&Maxwell Limited, 1970
 HailuZeleke, Insurance in Ethiopia, Historical Development, Present Status
and Future Challenges, August 2007
 John, F Dobbyn, Insurance Law in a Nutshell, Third Edition, West Group,
1996.
 Journal of Ethiopian Law, Volume 12 and 16
 TekleGiorgisAssefa, Risk Management and Insurance, Mekelle, 2004
 The Civil Code of the Empire of Ethiopia, Proclamation No 165 /1960
 The Commercial Code of the Empire of Ethiopia, Proclamation No 166/1960
 The Licensing and supervision of insurance Business Insurance Business
Proclamation No 521/2008
 The Licensing and Supervision of Insurance Business, Insurance Business
Proclamation No 86/1994
 The Maritime Code of the Empire of Ethiopia, Proclamation No 164/1960
 Vehicle Insurance Against Third Party Risks Proclamation No 799/2013

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