Cancel

Cancel Negotiable Instrument Bond Contract Securities Trade Order
In financial and legal contexts, 'cancel' refers to the act of voiding a negotiable instrument by annulling or settling it, prematurely terminating a bond or other contract, or voiding an order to buy or sell securities.
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Definition

Cancel, in general financial and legal terms, involves the act of voiding a negotiable instrument by either annulling or paying it, or prematurely ending a bond or another contract. In the context of securities trading, to cancel means to void an order to buy or sell.

Examples

  1. Negotiable Instrument: If a person writes a check and later decides they don’t want the transaction to go through, they can issue a stop payment order to the bank to cancel the check.
  2. Contract: A company may decide to cancel a supply contract if the supplier consistently fails to meet delivery deadlines.
  3. Securities Order: An investor might place an order to buy shares which they later cancel due to unfavorable market movements.

Frequently Asked Questions (FAQs)

Q1: Can a canceled contract be reinstated?
A: It depends on the terms of the contract and the agreement between the parties involved. Some contracts have clauses that outline the process for reinstatement, while others may require a new contract altogether.

Q2: How can I cancel a check?
A: To cancel a check, contact your bank to issue a stop payment order. You will need to provide details such as the check number, amount, and the recipient’s name.

Q3: What happens when a securities order is canceled?
A: When a securities order is canceled, the transaction is voided and the order will not be executed. The funds or securities involved remain in the account of the entity that placed the order.

Q4: Can bondholders cancel their bonds?
A: Bondholders cannot typically cancel the bonds they own; however, they can sell them in the secondary market if they choose not to hold them until maturity.

Q5: What is the difference between canceling and terminating a contract?
A: Canceling a contract generally refers to voiding it before it takes effect or before performance begins. Terminating a contract involves ending it after performance has started, often due to a breach or mutual consent.

Good-Till-Canceled Order (GTC):
A GTC order is an order to buy or sell a security that remains active until the investor decides to cancel it or the trade is executed.

Premature Termination:
The act of ending a contract or agreement before its specified termination date.

Stop Payment Order:
An instruction to a bank to not pay a presented check.

Online References

  1. Investopedia - Cancel Order
  2. SEC.gov - Understanding Order Types

Suggested Books for Further Studies

  1. “Fundamentals of Corporate Finance” by Richard A. Brealey, Stewart C. Myers, and Alan J. Marcus

    • Provides an in-depth understanding of financial principles, including concepts related to financial instruments and contracts.

  2. “Business Law: Text and Cases” by Kenneth W. Clarkson, Roger LeRoy Miller, and Frank B. Cross

    • A comprehensive guide to understanding the fundamentals of business law, covering topics from contracts to securities regulations.

  3. “Options, Futures, and Other Derivatives” by John C. Hull

    • This book offers a detailed exploration of financial instruments and their corresponding legal and financial nuances.

Fundamentals of Cancellation: Finance and Business Law Basics Quiz

### Can a contract be canceled for non-performance? - [x] Yes, if it has provisions for cancellation due to non-performance. - [ ] No, contracts can only be terminated not canceled. - [ ] Only under state law provisions. - [ ] Only with court approval. > **Explanation:** Contracts can be canceled if they contain clauses that specify cancellation options for non-performance. ### What is the primary difference between canceling and terminating a contract? - [ ] Cancellation requires a mutual agreement. - [x] Cancellation voids it before it starts, termination ends it after it begins. - [ ] Termination is a legal term while cancelation is not. - [ ] Cancelation applies only to rental contracts. > **Explanation:** Cancellation typically occurs before any performance and voids the contract, while termination occurs after performance has started. ### Who typically has the authority to cancel a stop payment order? - [ ] Anyone at the bank. - [ ] The person to whom the check was issued. - [x] The person who wrote the check. - [ ] The bank manager only. > **Explanation:** The person who wrote the check has the authority to issue a stop payment order to cancel it. ### Can you cancel a trade order after the market has closed? - [ ] Yes, but it will only take effect the next trading day. - [ ] No, all trades fixed post market hours get executed anyway. - [x] It depends on the broker's policies regarding after-hours trading. - [ ] Only limit orders can be canceled after market hours. > **Explanation:** Cancellation of a trade order after market closure depends on the broker’s policies regarding after-hours trading. ### When might a 'Good-Till-Canceled' (GTC) order be automatically canceled? - [ ] When market prices fluctuate significantly. - [x] At the broker's set expiration date, industry-standard of 30 to 90 days. - [ ] Only if the buyer decides. - [ ] Only upon bankruptcy of the issuer. > **Explanation:** GTC orders are usually automatically canceled at a broker's set expiration date, which is typically an industry-standard period. ### Are employees allowed to cancel their employment contracts? - [x] Yes, subject to the terms of the contract and employment law. - [ ] No, employment contracts are legally binding without exceptions. - [ ] Only with mutual consent. - [ ] Only after one year of service. > **Explanation:** Employment contracts can typically be canceled according to their terms and applicable employment laws. ### What confirms the completion of a canceled bond? - [x] Payment of the principal and interest till the point of cancellation. - [ ] Confirmation from both parties involved. - [ ] Just issuing a cancellation notice. - [ ] No specific confirmation is needed. > **Explanation:** Completion of a canceled bond is confirmed by the payment of principal and interest accrued till the point of cancellation. ### How can an investor cancel a good till canceled order? - [x] Through their brokerage platform by logging in. - [ ] Only by calling the market supervisor. - [ ] By waiting for the GTC to automatically expire. - [ ] By sending a cancellation notice via post. > **Explanation:** Investors can cancel a GTC order through their brokerage platform. ### What is the primary reason for issuing a stop payment order on a check? - [ ] Intent to close the bank account. - [x] To prevent a fraudulent or unwanted transaction. - [ ] To alert the payee about account issues. - [ ] For record-keeping purposes. > **Explanation:** A stop payment order on a check is primarily issued to prevent a fraudulent or unwanted transaction. ### Can a canceled contract with no 'reinstatement' clause be reinstated? - [ ] Yes, with judicial approval. - [ ] Only under mutual consent without exceptions. - [x] No, unless both parties agree to a new contract. - [ ] Only if one party insists strongly enough. > **Explanation:** Without a reinstatement clause, a canceled contract typically cannot be reinstated unless both parties agree to draft a new one.

Thank you for exploring the essentials of the concept of ‘Cancel’ with insights and knowledge quizzes. Continue striving for excellence in your understanding of finance and business law!

Wednesday, August 7, 2024
Cancellation Clause
Canadian Institute of Chartered Accountants (CICA)
Debt January 1, 1
Term January 1, 1

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