Negotiable Instrument ACT

Negotiable Instrument ACT - Transcript

DEFINITION

Negotiable Instrument Negotiable

A Negotiable instrument means a promissory note Negotiable bill of exchange or cheque payable ether to order or to bearer to
Sec 13

A Negotiable instrument is one the property in which is acquired by every person who takes it BONAFIDE and for value notwithstanding any defect off title in the person from whom he took it o
Judge Wills



In writing Signed by the Maker Drawer Promise or order to pay Promise order must be unconditional Payment in Money For a certain sum Payable at a time certain to arrive Drawee must be named or described with Drawee reasonable certainty reasonable

Essential Elements of a Negotiable Instruments Negotiable

Promissory Note
Meaning Meaning A Promissory note is an instrument in writing Promissory not being a bank note or currency note containing an unconditional undertaking signed by the maker to pay a certain sum of money or to the order of a certain person or to the bearer off the instrument o

Bill of Exchange Bill
Meaning A Bill of exchange is an instrument in writing Bill containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument instrument

Cheque Cheque
Meaning A Cheque is a bill of exchange drawn on a Cheque specified banker and not expressed to be payable otherwise than on demand payable

Distinction between Bill Promissory Note Distinction
Note Two parties Maker Two Dr Payee Cr Dr Cannot be made Cannot payable to the maker payable Bill 3 Parties Drawer Drawee Parties Payee Two can be ok Payee The drawer and payee or The drawee and payee same drawee Unconditional order to the Unconditional drawee to pay according to the drawer s directions drawer s



Unconditional promise Unconditional by the maker to pay by

Distinction between Bill Promissory Note Distinction
Note Bill Presented for payment Payable after sight must be Presented Payable w o any prior accepted by the drawee or acceptance by the some one else on his behalf maker before it can be presented maker before The liability of maker is Liability of the drawer is The Liability primary absolute secondary conditional primary secondary Maker stands in Maker immediate relation with the payee the Maker drawer of an accepted Maker drawer bill in immediate relation with the acceptor not the payee the

Distinction between Bill Promissory Note Distinction
Note No need of protest Bill Foreign bills must be protested Foreign for dishonor where law requires it requires Notice of dishonor by the Notice holder to the drawer intermediate endorsers intermediate



No notice is necessary

Distinction between A cheque B E Distinction
Cheque Drawn on a Banker Payable on demand Bill of Exchange May be drawn on any May person including a banker person Payable on demand or the Payable expiry of certain period after date of sight after Such a B E is void and Such illegal illegal Such acceptance is Such necessary necessary



Payable to bearer on Payable demand valid demand valid Does not require Does acceptance by the drawee acceptance



Distinction between A cheque B E Distinction
Cheque Does not require any stamp No days of grace Can be crossed Payment can be Payment countermanded by the drawer countermanded No system of noting protest Bill of Exchange Proper stamp is Proper necessary necessary Three days of grace on Three time bills time Can not be crossed No Such a thing is requred

Holder Holder
The holder of a negotiable instrument The means any person entitled to the possession of the instrument in his own name and to receive or recover the amount due thereon from the parties liable thereto due
Sec 8

Holder in due course Holder
1 He must be a holder 2 He must be a holder for valuable consideration 3 He must have become the holder of the N I He before its maturity before 4 He must take the N I complete and regular on He the face of it the 5 He must have become holder in good faith

Privileges of Holder in due course Privileges
He gets a better title than that of the transferor Privilege in case of inchoate stamped instruments Liability of prior parties Privilege in case of fictitious bill Privilege when an instrument delivered conditionally Privilege is negotiated is Estoppels against denying original validity of Estoppels instrument instrument Estoppels against denying capacity of payee to Estoppels indorse indorse

Negotiation Negotiation
DEFINITION When a promissory not bill of exchange or When cheque is transferred to any person so as to constitute that person the holder thereof the instrument is said to be negotiated the

MEANING

Not Negotiable Not

A person taking a cheque crossed person generally or specially bearing in either case the words Not Negotiable shall not have and shall not be capable of giving a better title to the cheque than which the person from whom he took it had person

Bouncing of Cheques Bouncing
Cheque should have been dishonored due to Cheque insufficiency of funds insufficiency Cheque presented within its validity For the discharge of legally enforceable debt or For other liability other Notice within 30 days of dishonor Failed to make the payment within 15 days of the Failed receipt of notice receipt A written complaint to a M M or 1st Class J M within one month of the date when the cause of action arose arose