Definition of Negotiable Instruments:
The Word Negotiable Means Transferable By Delivery, Word Instrument Means A Written Document By Which Some Person Thus The Term Negotiable Instrument Literally Means A Written Document Transferable By Delivery According The Negotiable Instruments Act A Negotiable A Promissory Note Bill Of Exchange Payable Either More Or One Or Some Of Several Payees.
History
Common prototypes of bills of exchanges and promissory notes originated in China. Here, in the 8th century during the reign of they used special instruments the safe transfer of money over long distances. Later such document for money transfer used by Arab merchants, centuries bill of exchange and promissory note obtain their main features and further phases of its development have been associated with and Germany. In Exchange Law was different from continental Europe because of different legal systems
NEGOTIABLE INSTRUMENT
(a) Except as provided in subsections.
(c) And
(d) negotiable instrument means an unconditional promise or order to pay a fixed amount of money,
(1) is payable to bearer or to order, at the time it is issued or first comes into possession of a holder.
(2) is payable on.
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain.
Negotiation and endorsement
Persons other than the original obligor and obligee can become parties to a negotiable instrument. if the person who signs does so with the intention of obtaining payment of the instrument or acquiring or transferring rights to the instrument, the signature is called an endorsement (i) an undertaking or power to give, maintain, or protect collateral to secure payment. (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral. (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor. An endorsement which purports to transfer the instrument to a specified person is a special endorsement – for example an endorsement by the payee or holder which does not contain any additional notation thus purporting to make the instrument payable to bearer is an endorsement in blank. An endorsement which purports to require that the funds be applied in a certain manner is a restrictive endorsement; and an endorsement purporting to disclaim retroactive liability is called a qualified endorsement through the inscription of the words without recourse as part of the endorsement on the instrument or in allonge to the instrument. An endorsement purporting to add terms and conditions is called a conditional endorsement for example. (1) Forgery of the instrument. (2) Fraud as to the nature of the instrument being signed (3) alteration of the instrument (4) incapacity of the signer to contract (5) infancy of the signer (6) duress (7) discharge in bankruptcy and, (8) the running of a statute of limitations as to the validity of the.
Thus, for a writing to be a negotiable instrument under Article.
Objectives of Negotiable Instruments
· After studying this lesson, you will be able to.
· Explain the meaning of negotiable instruments.
· Identify the various features of negotiable instruments.
· Describe the various types of negotiable instruments.
· Differentiate between bills of exchange, promissory notes.
(a) Except as provided in subsections. (b) Instrument means a negotiable instrument. (c) An order that meets all of the requirements of subsection. (d) except paragraph. (e) and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check. (g) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.
Thus, for a writing to be a negotiable instrument under Article
Features of Negotiable Instruments
After discussing the various types of negotiable instruments let us sum up their features. A when we transfer any property to somebody, we are required to make a transfer deed, get it registered, pay stamp duty. But, such formalities are not required while transferring a negotiable instrument. The ownership is changed by mere delivery or by valid endorsement and delivery when payable to order. However, (i) The promise or order to pay must be unconditional. (ii) The payment must be a specific sum of money. (iii) The payment must be made on demand or at a definite time. (vi) The instrument must not require the person promising payment to perform any act other than paying the money specified. (vii) The instrument must be payable to bearer or to order.
The title of the receiver will be absolute, only if he has got the instrument in good faith and for a consideration. Also the receiver should have no knowledge of the previous holder having any defect in his title. Such a person is known as holder in due course. If Girish received it in good faith and for value and without knowledge of cheque having been stolen, he will be entitled to receive the amount of the cheque. Here Girish will be regarded as. A negotiable instrument must be in writing. This includes handwriting, typing, computer print out and engraving. In every negotiable instrument there must be an unconditional order or promise for payment. The instrument must involve payment of a certain sum of money only and nothing else. For example, one cannot make a promissory note on assets, securities, or goods. The time of payment must be certain. It means that the instrument must be payable at a time.
THE NEGOTIABLE INSTRUMENTS LAW
What constitutes certainty as to sum: The sum payable is a sum certain within the meaning of this Act, although it is to be paid. (a) At a fixed period after date or sight (b) On or before a fixed or determinable future time specified therein (c) On or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening be uncertain.
An instrument to be negotiable must conform to the following requirements: (a) It must be in writing and signed by the maker or drawer (b) Must contain an unconditional promise or order to pay a sum certain in money (c) Must be payable on demand, or at a fixed or determinable future time (d) Must be payable to order or to bearer (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.
Essentials of a Promissory Note
1. It must be in writing
2. It must contain a Promise or undertaking to pay.
3. The promise to pay must be unconditional
4. It must be signed by the maker.
5. The maker must be a certain person.
6. The payee must be certain.
7. The sum payable must be certain.
8. The amount payable must be in legal tender money of india.
9. Other formalities.
Distinction between a pro note and a bill
1. Number of parties
2. The maker of note can not be the payee.
3. Promise to order
4. Acceptance
5. Nature of liability
6. Makers position
7. Payable of the bearer
8. Notice of dishonor
9. Applicability of certain Provisions.
Accommodation bill:
An accommodation bill is apparently quite similar to an ordinary trade bill of exchange, the special feature which distinguishes it from an ordinary bill is that such a bill is not supported by any consideration or a trading transaction. Thus the relationship between the drawer and the drawee is not that of a creditor and a debtor in the case of an accommodation bill.
Fictitious bill
When in a bill of exchange the name of both the drawer and the pave are fictitious the bill is said to be a fictitious bill Such a bill is drawn in a fictitious name and is made payable to the drawer’s and as such the name of both the drawer and the payee are said to be of a fictitious person
Documentary Bill
When documents relating to the goods represented by bill eg bill of lading or railway receipt invoice marine insurance policy etc are attached to bill is called is called a documentary bill such documents are delivered to the buyer only on acceptance or payment of the bill.
Special Benefits of Bill of Exchange
The special benefits of using bills of exchange in the world of commerce are as follows
1. A bill of exchange is a double secured instrument If the bill is dishonored by the acceptor, the holder or the payee may look to the drawer of the bill for payment.
2. In case of immediate need of money a bill can be discounted with a bank by the payee.
Tow separate trade debts can be discharged by a bill of exchange Hence where A busy goods on credit from B months after date and B buys goods on credit from C on similar terms for similar amount an order by B to A pay the sum of tow separate trade debts
The Word Negotiable Means Transferable By Delivery, Word Instrument Means A Written Document By Which Some Person Thus The Term Negotiable Instrument Literally Means A Written Document Transferable By Delivery According The Negotiable Instruments Act A Negotiable A Promissory Note Bill Of Exchange Payable Either More Or One Or Some Of Several Payees.
History
Common prototypes of bills of exchanges and promissory notes originated in China. Here, in the 8th century during the reign of they used special instruments the safe transfer of money over long distances. Later such document for money transfer used by Arab merchants, centuries bill of exchange and promissory note obtain their main features and further phases of its development have been associated with and Germany. In Exchange Law was different from continental Europe because of different legal systems
NEGOTIABLE INSTRUMENT
(a) Except as provided in subsections.
(c) And
(d) negotiable instrument means an unconditional promise or order to pay a fixed amount of money,
(1) is payable to bearer or to order, at the time it is issued or first comes into possession of a holder.
(2) is payable on.
(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain.
Negotiation and endorsement
Persons other than the original obligor and obligee can become parties to a negotiable instrument. if the person who signs does so with the intention of obtaining payment of the instrument or acquiring or transferring rights to the instrument, the signature is called an endorsement (i) an undertaking or power to give, maintain, or protect collateral to secure payment. (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral. (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor. An endorsement which purports to transfer the instrument to a specified person is a special endorsement – for example an endorsement by the payee or holder which does not contain any additional notation thus purporting to make the instrument payable to bearer is an endorsement in blank. An endorsement which purports to require that the funds be applied in a certain manner is a restrictive endorsement; and an endorsement purporting to disclaim retroactive liability is called a qualified endorsement through the inscription of the words without recourse as part of the endorsement on the instrument or in allonge to the instrument. An endorsement purporting to add terms and conditions is called a conditional endorsement for example. (1) Forgery of the instrument. (2) Fraud as to the nature of the instrument being signed (3) alteration of the instrument (4) incapacity of the signer to contract (5) infancy of the signer (6) duress (7) discharge in bankruptcy and, (8) the running of a statute of limitations as to the validity of the.
Thus, for a writing to be a negotiable instrument under Article.
Objectives of Negotiable Instruments
· After studying this lesson, you will be able to.
· Explain the meaning of negotiable instruments.
· Identify the various features of negotiable instruments.
· Describe the various types of negotiable instruments.
· Differentiate between bills of exchange, promissory notes.
(a) Except as provided in subsections. (b) Instrument means a negotiable instrument. (c) An order that meets all of the requirements of subsection. (d) except paragraph. (e) and otherwise falls within the definition of "check" in subsection (f) is a negotiable instrument and a check. (g) A promise or order other than a check is not an instrument if, at the time it is issued or first comes into possession of a holder, however expressed, to the effect that the promise or order is not negotiable or is not an instrument governed by this Article.
Thus, for a writing to be a negotiable instrument under Article
Features of Negotiable Instruments
After discussing the various types of negotiable instruments let us sum up their features. A when we transfer any property to somebody, we are required to make a transfer deed, get it registered, pay stamp duty. But, such formalities are not required while transferring a negotiable instrument. The ownership is changed by mere delivery or by valid endorsement and delivery when payable to order. However, (i) The promise or order to pay must be unconditional. (ii) The payment must be a specific sum of money. (iii) The payment must be made on demand or at a definite time. (vi) The instrument must not require the person promising payment to perform any act other than paying the money specified. (vii) The instrument must be payable to bearer or to order.
The title of the receiver will be absolute, only if he has got the instrument in good faith and for a consideration. Also the receiver should have no knowledge of the previous holder having any defect in his title. Such a person is known as holder in due course. If Girish received it in good faith and for value and without knowledge of cheque having been stolen, he will be entitled to receive the amount of the cheque. Here Girish will be regarded as. A negotiable instrument must be in writing. This includes handwriting, typing, computer print out and engraving. In every negotiable instrument there must be an unconditional order or promise for payment. The instrument must involve payment of a certain sum of money only and nothing else. For example, one cannot make a promissory note on assets, securities, or goods. The time of payment must be certain. It means that the instrument must be payable at a time.
THE NEGOTIABLE INSTRUMENTS LAW
What constitutes certainty as to sum: The sum payable is a sum certain within the meaning of this Act, although it is to be paid. (a) At a fixed period after date or sight (b) On or before a fixed or determinable future time specified therein (c) On or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening be uncertain.
An instrument to be negotiable must conform to the following requirements: (a) It must be in writing and signed by the maker or drawer (b) Must contain an unconditional promise or order to pay a sum certain in money (c) Must be payable on demand, or at a fixed or determinable future time (d) Must be payable to order or to bearer (e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty.
Essentials of a Promissory Note
1. It must be in writing
2. It must contain a Promise or undertaking to pay.
3. The promise to pay must be unconditional
4. It must be signed by the maker.
5. The maker must be a certain person.
6. The payee must be certain.
7. The sum payable must be certain.
8. The amount payable must be in legal tender money of india.
9. Other formalities.
Distinction between a pro note and a bill
1. Number of parties
2. The maker of note can not be the payee.
3. Promise to order
4. Acceptance
5. Nature of liability
6. Makers position
7. Payable of the bearer
8. Notice of dishonor
9. Applicability of certain Provisions.
Accommodation bill:
An accommodation bill is apparently quite similar to an ordinary trade bill of exchange, the special feature which distinguishes it from an ordinary bill is that such a bill is not supported by any consideration or a trading transaction. Thus the relationship between the drawer and the drawee is not that of a creditor and a debtor in the case of an accommodation bill.
Fictitious bill
When in a bill of exchange the name of both the drawer and the pave are fictitious the bill is said to be a fictitious bill Such a bill is drawn in a fictitious name and is made payable to the drawer’s and as such the name of both the drawer and the payee are said to be of a fictitious person
Documentary Bill
When documents relating to the goods represented by bill eg bill of lading or railway receipt invoice marine insurance policy etc are attached to bill is called is called a documentary bill such documents are delivered to the buyer only on acceptance or payment of the bill.
Special Benefits of Bill of Exchange
The special benefits of using bills of exchange in the world of commerce are as follows
1. A bill of exchange is a double secured instrument If the bill is dishonored by the acceptor, the holder or the payee may look to the drawer of the bill for payment.
2. In case of immediate need of money a bill can be discounted with a bank by the payee.
Tow separate trade debts can be discharged by a bill of exchange Hence where A busy goods on credit from B months after date and B buys goods on credit from C on similar terms for similar amount an order by B to A pay the sum of tow separate trade debts
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