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This document summarizes key aspects of Negotiable Instruments Law. It notes that negotiable instruments are intended as money substitutes and must have certain features like exemption from contract defenses and accumulation of secondary liabilities. It discusses the requisites of negotiability including an unconditional promise to pay, order to pay, and ability to pass from one person to another through endorsement and delivery. The document also outlines the four stages of a negotiable instrument transaction and protections afforded to holders in due course who take the instrument in good faith, for value, and without notice of any defects or defenses.
This document summarizes key aspects of Negotiable Instruments Law. It notes that negotiable instruments are intended as money substitutes and must have certain features like exemption from contract defenses and accumulation of secondary liabilities. It discusses the requisites of negotiability including an unconditional promise to pay, order to pay, and ability to pass from one person to another through endorsement and delivery. The document also outlines the four stages of a negotiable instrument transaction and protections afforded to holders in due course who take the instrument in good faith, for value, and without notice of any defects or defenses.
This document summarizes key aspects of Negotiable Instruments Law. It notes that negotiable instruments are intended as money substitutes and must have certain features like exemption from contract defenses and accumulation of secondary liabilities. It discusses the requisites of negotiability including an unconditional promise to pay, order to pay, and ability to pass from one person to another through endorsement and delivery. The document also outlines the four stages of a negotiable instrument transaction and protections afforded to holders in due course who take the instrument in good faith, for value, and without notice of any defects or defenses.
It must have certain features - Compare with non-NI Ex: Deed of sale 1. Exemption from defenses from underlying contract 2. Accumulation of secondary liabilities Endorsement - Guarantees instruments are genuine Ensure fairness in commercial transaction 2 parts of NIL o requisites of negotiability if absence of any requisites, it is still a valid contract but not under NIL promise to pay order to pay pass to man to man how do you transfer it? By signing and delivery if to payable to bearer delivery is sufficient o liabilities what happens if there is forgery 4 stages of the transaction o execution of the promissory note o execution of an order to pay you always go back to requisites of a valid contract o ex: consent how? By accepting 4 important stages: making drawing, negotiating and accepting protects the holder in due course o if you have actual knowledge that it was issued for an illegal activity or if the check was stolen the one who has knowledge cant raise the defenses (estoppel) comparative . compare the specimen if the negligence of the drawer outweighs the negligence of the bank, bends to the drawer holder in due course section 52 o someone who took the instrument in good faith. No knowledge of defects or for value before the maturity of the instrument and without notice of defenses. o If with a period, there must first be a delay Section 1 and 2 of NIL o Symbol is irrelevant if the one signing intended the said signature. o Acknowledgment of debt is evidentiary of an existing obligationnot an order to pay o Promise to pay creates a NEW obligation.
o Authority to pay is not equivalent to an order to pay
o Order to pay must be unconditional, payable in money because NI was intended to substitute money. o It must be certain people must know how much he/she would get out of it. o Time so that the person would know when it is demandable. It must be complete so as to enable the other party to know the exact time. o Bearer or holder or possessor o If bill of exchange, drawer must be indicated with certainty so that the person would know from where he should get he payment -Section 2 to 9. o Discretion of the credit is not absolute if it is unconscionable (30% or more - interest) o Indicate the amount of which installment and when it should be paid. Acceleration clause when it is due. Exchange -contemplates at least 2 currencies Only LOOK at the four corners of the instrument, DO NOT LOOK AT EXTRINSICE EVIDENCE Abubakar v. governor general, metropolitan bank case trust vs. CA(treasury warrants) (section 66 cannot be invoked in this case) o Section 66 can be invoked when it does not prohibit from using other funds when the funds are no longer sufficient. Accelerating payment better view Section 6 refer to 17 and 24 and 73 Section 8
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