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History
Introduction
Characteristics
Freely transferable
Title of holder free from all defects
Recovery
Presumptions: Consideration, date,
time, time of acceptance & transfer,
order of indorsements , stamp,
holder is a holder in due course,
proof of protest
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Types of Negotiable
Instruments
Negotiable by Statute
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Must be in writing
Promise to pay
Definite & unconditional
Signed by the maker
Certain parties
Certain sum of money
Promise to pay only money
No bank note or currency note
Other formalities
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Bill of Exchange
A bill of exchange is an instrument in
writing 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.
Parties Involved: Drawer
Drawee
Payee
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In writing
Order to pay
Unconditional
Requires 3 parties & certain
Signed
Sum to be certain
Order to pay money
Other formalities
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Cheque
a bill of exchange drawn on a
specified banker and not expressed
to be payable otherwise than on
demand
it includes the electronic image of a
truncated cheque and a cheque in
the electronic form.
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Cheque
Marking of Cheques
At drawer's instance
At holders instance
At collecting Bankers instance
Crossing of Cheques
General crossing
Special crossing
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Difference
Bill Of Exchange
Three parties-drawer,
drawee, payee
Unconditional order
Drawer-creditor
Liability is secondary
Can be drawn payable
to bearer
Drawer stands in
immediate relation
with acceptor and not
payee.
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Promissory Note
Two parties-maker,
payee
Unconditional promise
Maker-debtor
Liability is primary
Cannot be drawn
payable to bearer
Maker stands in
immediate relation
with the payee
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Distinguishing Features
Bill of Exchange
Drawn on any person
Bill must be accepted
before drawee can be
called for payment
Entitled to 3 days of
grace
Not crossed
Requires stamp
May be protested for
dishonour
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Cheque
Drawn on a banker
Cheque requires no
acceptance
Not entitled to any
days of grace
May be crossed
Does not require
stamp
Not protested for
dishonour
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Classification of Negotiable
Instruments
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Bill in sets
Maturity & days of grace
Payment in due course
Interest on bills & notes
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Capacity Of Partners:
Every person capable of contracting, according to the law to
which he is subject, may bind himself and be bound by the
making, drawing, acceptance, endorsement, delivery and
negotiation of a promissory note, bill of exchange or cheque.
Minors
Persons of unsound mind
Corporations
Agents
Partners
Hindu Joint Family
Legal Representatives
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Parties to Negotiable
Instruments
1) Parties to Bill of Exchange:
Drawer
Drawee
Acceptor
Payee
Holder
Indorser
Indorsee
Drawee in case of need
Acceptor of honour
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Parties to Negotiable
Instruments
3)Parties to a cheque: -
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Holder:
Where the note, bill or cheque is lost or destroyed, its holder is the
person so entitled at the time of such loss or destruction .
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Liability Of Parties:
1) Liability of drawer
2) Liability of drawee of cheque
3) Liability of maker of note and
acceptor of bill
4) Liability of indorser
5) Liability of prior parties to a holder
in due course
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Negotiation
1)By Negotiation
Negotiation by delivery
Negotiation by indorsement & delivery
2)By Assignment
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Indorsement:
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Kinds of Indorsement:
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Instruments obtained by
unlawful means
Stolen instruments
Coercion or Fraud
Unlawful consideration
Forged instruments
Forged indorsement
Without Consideration
Lost negotiable instruments
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Presentment of a negotiable
instrument.
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Modes of acceptance.
General acceptance.
Qualified acceptance.
An acceptance is qualified when it is
Conditional
Partial
Qualified as to place and
Qualified as to time
Acceptance by some of drawees but not
all.
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Presentment of acceptance to
whom?
The drawee
All or some of several drawees
Drawee in case of need
All the drawees in case of several
drawees
Duly authorized agent of the drawee
Legal representative in case of death of
the drawee
Official Receiver or Assignee in case of
insolvency of the drawee
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When:
a.
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a.
b.
c.
Where
If place for presentment is mentioned in
the bill
If the place of presentment is not
mentioned in the bill
The holder must allow the drawee fortyeight hours to consider whether to
accept the bill
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Effect of non-presentment
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When the bill is dishonoured by nonacceptance holder may allow any other
person to accept it for the honour of
drawer or any one of the indorsers.
Conditions for valid acceptance for
honour:
The bill must have been noted or
protested.
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Contd..
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Dishonour of a negotiable
instrument
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Contd..
Form of notice.
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Noting
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Protest
Fact of dishonour of bill of exchange or promissory
note
is noted and certified by Notary Public. Such
certificate is called protest.
Contents of protest:
The name of the person for whom and against whom the
instrument has been protested.
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Discharge of an Instrument
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Material Alteration
Instances of material Alteration
The date
Sum Payable
Time of payment
Place of payment & addition of place
of payment
Rate of interest
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ESTOPPEL
When a person by his conduct or
words spoken or written leads
another person to believe that a
certain state of affairs exists, he is
estopped from denying the facts of
that statement later.
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Rules of Estoppel
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International Law
1.
2.
3.
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HUNDIS
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Set off
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2.
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Contd.
Paying banker will not be protected
if the drawers signature is forged
and the banker makes the payment
on the cheque
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Presented by
Akanksha Kedia(FPB0709/007)
Anindita Kundu(FPB0709/015)
Anupama(FPB0709/020)
Isha Mehta(FPB0709/056)
Yageshwari Trivedi(FPB0709/158)
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Thank You