Negotiable Instruments

Negotiable Instruments
Name: Brahmanand Shet

USN no :2JI17MBA09
What is Negotiable I n strum ents?
The term negotiable instruments means a written
document which entitles a person to a sum of money.
A negotiable instruments is transferable by delivery

or by endorsement and delivery.
The transfer entitles a person to the sum of money

mentioned therein.
“Thus the negotiable instrument is a document which is

legally recognized by custom of trade or law,
transferable by delivery or by endorsement and
delivery.”
Characteristics Of a Negotiable Instrument
 Freely transferable: The property in a negotiable instrument passes from one
person to another by a simple process, i.e., by mere delivery if it is payable to
bearer, and by endorsement and delivery if it is payable to order.
 Holder’s title free from all defects: The holder in due course (one who
acquires the instrument in good faith and for consideration) gets it free from all
defects.
 Recovery: One can sue upon the instrument in his own name.
 Payable to order or bearer: - It must be payable either to order or bearer
 Presumption as to Holder:- Every holder of negotiable instrument is presumed

to be holder in due course.
 Presumption as to considerations:- Every negotiable instrument is presumed to

have been made, drawn, accepted, endorsed , negotiated or transferred for
consideration.
Types of Negotiable Instruments
 Promissory note.
 Bill of exchange.
 Cheque.
Promissory note.
A promissory note is an instrument in writing
containing an unconditional undertaking signed by
the maker 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
 MAKER : The person who makes the promissory note and
promises to pay is called the Maker.
 PAYEE: The person to whom the payment is to be made is

called the Payee.
 HOLDER: The holder is either the payee or someone to whom

he may have indorsed (transfer) the note is known as Holder.
 ENDORSER: The person who indorses the note to another is

called the Endorser .
 ENDORSEE: The person to whose favor the note is endorsed is

called the Endorsee
Essentials Of The Promissory Notes
 It must be in writing.
 It must contain a promise or undertaking to pay a
definite sum of money.
 The promise to pay must be unconditional.
 It must be signed by the maker.
 The payee must be identified & must be certain.
 The sum payable must be certain.
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 certain person to
the bearer of the instrument.
Parties
 DRAWER: The person who makes the bill of exchange is
called drawer.
 DRAWEE: The person who is directed to pay is called

drawee.
 PAYEE: The person to whom the payment is to be made is

called payee.
 ACCEPTOR: When the drawee accepts the bill is called

acceptor.
Characteristics Of Bill Of Exchange
The amount payable must be certain.
The payment must be made in money.
The bill payable may be either on demand or after a

specified period.
The bill may be payable either to the bearer or to the

order of payee.
Cheque
A cheque is a bill of exchange drawn on a specified
banker and expressed to be payable otherwise than on
demand.
The maker of a bill of exchange or Cheque is called
the “Drawer"; the person thereby directed to pay is
called the "Drawee".
Parties
 DRAWER: The person who makes a cheque is called
Drawer.
 DRAWEE: The person who is directed to pay is called

Drawee.
 PAYEE: The person to whom the payment is to be made.

Characteristics Cheque
 In writing
 Express order to pay
 Definite and unconditional order
 Signed by drawer
 Order to pay certain amount
 Payable on demand
Crossing of Cheque
A cheque is said to be crossed when it bears across its face two
parallel transverse lines which are usually drawn on the left
hand top corner of the Cheque.
Legally there are two kinds of crossing.
General crossing: The drawing up of two parallel lines on

the face of the check at the top left hand corner with or without
the words & Co not negotiable or Account payee only is known
as a General Crossing.
Special crossing: A check is deemed to be crossed

specially when it bears across its face the name of the
banker either with or without the words not negotiable.
Negotiation
An instrument is said to be negotiated:
 When a promissory note, BOE, cheque is transferred to any

person so as to constitute that person the holder of the
instrument
Transfer with an intention to transfer the title of the instrument.
 Negotiation by delivery
 Negotiation by endorsement and delivery
Presentment
 Presentment for Acceptance (required only in

case of BOE)
 Presentment for payment
 Presentment made to the drawee.
 Must be made before the date of maturity
Dishonor
A negotiable instrument is said to be dishonored by non-

payment when the maker, acceptor or drawee, as the case
maybe makes default in payment upon being duly required
to pay the same.
 Dishonor by non payment

 Dishonor by non acceptance
THANK YOU

Negotiable Instruments

Uploaded by

Copyright:

Available Formats

Negotiable Instruments

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Negotiable Instruments

Uploaded by

Copyright:

Available Formats

Negotiable Instruments

Name: Brahmanand Shet

A negotiable instruments is transferable by delivery

The transfer entitles a person to the sum of money

“Thus the negotiable instrument is a document which is

 Payable to order or bearer: - It must be payable either to order or bearer

 Presumption as to Holder:- Every holder of negotiable instrument is presumed

 Presumption as to considerations:- Every negotiable instrument is presumed to

 PAYEE: The person to whom the payment is to be made is

 HOLDER: The holder is either the payee or someone to whom

 ENDORSER: The person who indorses the note to another is

 ENDORSEE: The person to whose favor the note is endorsed is

A bill of exchange is an instrument in writing

 DRAWEE: The person who is directed to pay is called

 PAYEE: The person to whom the payment is to be made is

 ACCEPTOR: When the drawee accepts the bill is called

The amount payable must be certain.

The payment must be made in money.

The bill payable may be either on demand or after a

The bill may be payable either to the bearer or to the

 DRAWEE: The person who is directed to pay is called

 PAYEE: The person to whom the payment is to be made.

 Express order to pay

 Definite and unconditional order

 Order to pay certain amount

Legally there are two kinds of crossing.

General crossing: The drawing up of two parallel lines on

Special crossing: A check is deemed to be crossed

An instrument is said to be negotiated:

 When a promissory note, BOE, cheque is transferred to any

Transfer with an intention to transfer the title of the instrument.

 Presentment for Acceptance (required only in

A negotiable instrument is said to be dishonored by non-

 Dishonor by non payment

You might also like