Negotiable Instruments Act

1881

Kinds of Negotiable Instrument

Negotiable instrument Negotiable

instrumentBy STATUTE By custom or

usage 1) Promissory note. 1) Bank draft. 2) Bill of exchange. 2) Pay orders. 3) Cheque. 3) Hundies. 4) Delivery

orderNot Negotiable Instruments: Share certificate, bill of lading, postal order

Negotiable Instrument• The word 'negotiable' means transferable from one

person to another, and the term 'instrument' means 'any written document by which a right is created in favour of some person.'

• According to Section 13(i) “ a negotiable instrument means a promissory note, bill of exchange or cheque payable either on order or to bearer”.

• An instrument may be negotiable either by1. Statute: Promissory Notes , bills of exchange and

cheques are negotiable instruments under Negotiable Instruments Act 1881 .

2. By Usage: Bank notes, bank drafts, share warrants, bearer debentures, dividend warrants, scripts and treasury bills

Transfer by Negotiation

• Negotiation is a transfer of an instrument from one person to another in such a manner as to express title & to represent the transferee the holder thereof.

• Passing of possession with intention to pass title• Must be transferred in such a manner that the

transferee becomes holder thereof.

Methods of Negotiation

1. Negotiation by delivery2. Negotiation by endorsement & delivery3. Property is transferred to the endorsee4. Endorsee get right to negotiate the instrument,

sue on instrument.

Characteristics

An instrument is to be called 'negotiable' if it possesses the following characteristic features:

• Freely transferable - Transferability may be by – delivery, or – by endorsement and delivery.

• Holder's title free from defects: The holder (of the negotiable instrument) in due course acquires a good title not withstanding any defect in a previous holder's title. A holder in due course is one who receives the instrument for value and without any notice as to the defect in title of the transferor.

• The Holder can sue in his own Name - Another characteristic feature of a negotiable instrument, is that its holder in due course, can sue on the instrument in his own name.

Cont… Characteristics• A negotiable instrument can be transferred any

number of times till its maturity.• A negotiable instrument is subject to certain

presumptions

• Presumptions as to negotiable instruments [Sections 118-119]

1) As to Consideration - Every negotiable instrument is deemed to have been made, drawn, and accepted endorsed, negotiated or transferred for consideration.

2) As to date- Every negotiable instrument bear the date on which it is made or drawn.

3) As to Acceptance- Every bill of exchange was accepted within a reasonable time after the date mentioned therein and before the date of its maturity.

4) As to Transfer- Every transfer of a negotiable instrument was made before the date of its maturity in case of an instrument payable otherwise than on demand.

Cont… Characteristics

5) As to the order of Endorsements - The endorsements appearing on it were made in the order in which they appear thereon.

6) As to lost Instruments - Where an instrument has been lost or destroyed, that it was duly stamped and the stamp was duly cancelled.

7) As to holder-in-due course - The holder of the instrument is a holder in due course.

8) As to dishonor - If a suit is filed upon an instrument, which has been dishonored, the Court shall, on proof of the protest, presume the fact of dishonor

unless it is disproved.

Meaning of Endorsement

• When a maker or holder writes the person’s name on the face or back of the instrument & puts his signatures thereto for the purpose of negotiation, it is called ‘endorsement’.

• Person who signs – endorser• To whom it is endorsed – endorsee.• A legal term that refers to the signing of a

document which allows for the legal transfer of a negotiable from one party to another.

• When an employer signs a check, they are endorsing the transfer of money from the business accounts to the account of the employee.

Promissory Notes

• Section 4 defines it as, “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”.

• The person who makes the promissory note is called the maker.

• The person to whom payment is to be made is called the payee.

• e.g. – I promise to pay B or order Rs. 500– I promise to pay B Rs.500 on D’ death, provided D leaves me

enough to pay that sum

FORMAT OF PROMISSORY NOTE

Rs. 10,000 Visakhapatnam, February 29,2012

Three months after date, I promise to pay Shyam or order the sum of Ten thousand rupees for value received with interest @ 12% p.a.

To, Shyam 222, Ashok Vihar, Visakhapatnam - 530019

Stamp

Sd/-Ram

Essentials or Characteristics of a

Promissory NoteFrom the definition, it is clear that a promissory note

must have the following essential elements.(1)In writing - A promissory note must be in writing.

Writing includes print and typewriting.(2)Promise to pay - It must contain an undertaking or

promise to pay. Thus, a mere acknowledgement of indebtedness is not sufficient. Notice that the use of the word `promise' is not essential to constitute an instrument as promissory note.

(3)Unconditional - The promise to pay must not be conditional. Thus, instruments payable on perfor mance or non-performance of a particular act or on the happening or non-happening of an event are not promissory notes.

Essentials or Characteristics of a

Promissory Note (cont..)(4)Signed by the Maker – The promissory note must

be signed by the maker, otherwise it is of no effect. (5)Certain Parties - The instrument must point out

with certainty the maker and the payee of the promissory note.

(6)Certain sum of money - The sum payable must be certain or capable of being made certain.

(7)Promise to pay money only - If the instrument contains a promise to pay something in addition money, it cannot be a promissory note.

(8)Number, place, date etc - These are usually found in a promissory note but are not essential in law. If a promissory note does not bear a date, it is deemed to have been made when it was delivered.

Essentials or Characteristics of a Promissory Note (cont..)

(9) It may be payable in installments (10)It may be payable on demand or after a

definite period - Payable 'on demand' means payable immediately or any time till it becomes time-barred. A demand promissory note becomes time barred on expiry of 3 years from the date it bears.

(11)It cannot be made payable to bearer on demand or even payable to bearer after a certain period

(12)It must be duly stamped under the Indian Stamp Act - It means that the stamps of the requisite amount must have been affixed on the instrument and duly cancelled either before or at the time of its execution. A promissory note, which is not so stamped, is a nullity.

* A currency note is not a promissory note

Bill of Exchange• Section 5, is defined as “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 to Bill of Exchange :

• Drawer – The person who makes/orders to pay bill of exchange.

• Drawee – The person who is directed to pay on bill. On acceptance he becomes acceptor.

• Payee – The person to whom the payment is to be made.• Drawer & Payee can be the same person. • X sells goods worth Rs. 2000 to Y & allow him 3 months time to

pay the price. X then draws a bill on Y “ Three months after date, pay to my order the sum of Rs. 2000 for value received”. X is drawer . Y is Drawee.

FORMAT OF BILL OF EXCHANGE

Rs. 500 Greater Noida,21 Feb.2009

Three months after the date pay to Ram or order the sum of Five Hundred rupees , for value received.

To, Shyam 235, Subhash marg delhi-110006. Accepted Shyam

Sd/-

Stamp

Krishna

Essential of Bills of Exchange

1) It must be in writing.2) It must contain an order to pay and not a

promise or request.3) The order must be unconditional.4) There must be three parties, viz., drawer, drawee

and payee. 5) The parties must be certain.6) It must be signed by the drawer.7) The sum payable must be certain or capable of

being made certain.8) The order must be to pay money and money

alone.9) It must be duly stamped as per the Indian Stamp

Act. 10)Number, date and place are not essential.

Distinguishing Features Between Promissory Note & Bill of Exchange

1. Maker—debtor

2. Maker & Payee different

3. Two parties

4. Unconditional promise

1. Drawer—creditor.

2. Drawer and Payee may be the same.

3. Three Parties .

4. Contains an order to make the payment

S.21 (“At sight”, “On presentment”, “After sight”):

In a promissory note or bill of exchange the expressions “at sight” and “on presentment” mean on demand. The expression “after sight” means, in a promissory note, after presentment for sight, and, in a bill of exchange, after acceptance, or noting for non-acceptance, or protest for non-acceptance.· Unlike the Instruments expressed “payable on demand”, “at sight” and “on presentation” Instruments (‘after sight’) are to be presented, before payment is demanded.· The “limitation” period runs from the day relevant.

Distinguishing Features Between

Promissory Note & Bill of Exchange

5. Need no acceptance

6. Liability of maker primary & unconditional

7. A promissory Note cannot be drawn in sets

8. Dishonor may not informed to all

5. Must be accepted by the drawee

6. Liability of the drawer primary till acceptance by the drawee.

7. Drawn in sets

8. Dishonour informed to all

Cheques• Section 6, defines it as “ A cheque is a bill of

exchange drawn on a specified banker & not expressed to be payable otherwise than on demand”.

• It is always drawn on a specified banker.• It is payable to bearer on demand

Parties To Cheque:1. Drawer – who makes the cheque2. Payee – to whom payment is to be made3. Drawee – Bank .

• Meaning of Truncated cheque:- A “Truncated cheque” means a cheque which is truncated during the course of a clearing cycle, either by the clearing house or by the bank whether paying or receiving payment, immediately on generation of an electronic image. For transmission, substituting the further physical movement of the cheque in writing.

• Meaning of a cheque in electronic form:- A “Cheque in the electronic form” means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature and asymmetric crypto system.

1. In writing 2. Unconditional order3. Signed by drawer4. Payable on demand5. Specified banker 6. Printed form (Cheque Leaves to be

printed)7. Payment in money form only8. Certain amount9. Payable to specified person or his order

or bearer.10.Date

Essentials of a Cheque

Sample Cheque

•

1. Branch address with IFSC code printed top of the cheque

2. Date in dd/mm/yyyy format with boxes3. Printers name with CTS-2010 in left

side of cheque4. A pantograph which shows VOID/COPY

while taking photocopy of the cheque below the account number

5. New rupee symbol instead of bilingual format

6. “Please sign above” is mentioned on bottom right of the cheque

Distinguishing Features Between

Cheque & Promissory Note1. Drawer is creditor- must

have an account in the Bank.

2. Three parties

3. Contains order to Drawee (Bank)

4. Always Payable on Demand

1. Maker owes some money to another person.

2. Two parties

3. Contains promise to pay

4. Payable on Demand or on a fixed date or determinable future time

Cheque

1. Drawee: Cheque can be drawn only on a banker.

2.  Time of payment: A cheque is payable on demand.

3.  Grace period: Cheque is payable on demand and no grace period is allowed.

4.  Notice of dishonour: Notice of dishonour is not necessary.

5.  Acceptance: A cheque is not required to be presented for acceptance. It needs to be presented only for payment.

6. Crossing: A cheque may be crossed.

7. Validity period: A cheque is usually valid for a period of 3 months.

Bill of exchange 1. The drawee may be any

person.2. A bill may be drawn payable

on demand or on expiry of certain period after date or sight.

3.  While calculating maturity three day’s grace is allowed.

4.  A notice of dishonour is required.

5.  Bills require presentment for acceptance and it is better to present them for acceptance even when it is not essential to do so.

6. A bill of exchange cannot be crossed.

7.  A bill may be drawn for any period.

Types of Cheque

There are two types of cheque:

1. Open cheque – those which can be en cashed across the counter of the bank. Liable to great risk if stolen or lost. Finder can get payment from bank.

2. Crossed cheque – which bears two transverse lines with or without the words “ & co.”

Meaning of Crossing of Cheque

• Crossing of a cheque is a unique feature associated with a cheque affecting to a certain level the responsibility of the paying Banker and also its negotiable Character.

• Crossing of a Cheque is a direction to a particular Banker by the Drawer that Payment should not be made across the Counter. The payment on the crossed Cheque can be collected only through a Banker.

• Crossing of the Cheque is affected by drawing two parallel Transverse lines .

• The Cheque that is not crossed is an open Cheque.

Various Types of Crossing

1. General crossing (S.123)2. Special crossing (S.124)3. Restrictive crossing (developed

out of business usage)

Various Types of Crossing

1. General Crossing (S.123): which bears across its face the words “ & co.” or the words “not negotiable”. For general crossing two transverse lines on the face of cheque are essential. The paying banker shall pay only to a banker. There are two sloping parallel lines, marked across its face.

• The cheque bears an short form "& Co. "between the two parallel lines

• The cheque bears the words "A/c. Payee" between the two parallel lines.

• The cheque bears the words "Not Negotiable" between the two parallel lines.

Specimen of General Crossing

(Cont..)Various Types of Crossing

2. Special Crossing (S.124): When a particular bank's name is written in between the two parallel lines the cheque is said to be specially crossed. Where a cheque bears across its face an addition the name of banker either with or without the words “ not negotiable”.

It contains: • The name of the banker across the face of cheque.• With the words “ not negotiable”

• Specially crossed cheques are more safe than a generally crossed cheques.

(Cont..)Various Types of Crossing

3. Restrictive Crossing:• A cheque which additionally contains the words ‘A/C

Payee’ in the general or special crossing cheque with or with out the words not negotiable.

CHEQUE BEARING “NOT NEGOTIABLE” [Section 130]

A person taking a cheque crossed 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 the person from whom he took it had. [section 130].

• Thus, mere writing words ‘Not negotiable’ does not mean that the cheque is not transferable. It is still transferable, but the transferee cannot get title better than what transferor had.

Specimen of Special & Restrictive Crossing

Why Crossing of Cheque is being used

• The important usefulness of a crossing cheque is that it cannot be covered at the counter but can be collected only by a bank from the drawee bank.

• Crossing provides a protection and safeguard to the owner of the cheque as by securing payment through a banker it can be easily detected to whose use the money is received. Where the cheque is crossed the paying banker shall not pay it except to a banker.

• In case of not negotiable crossing the person holding such a cheque gets no better title than that of his transfer and cannot suggest a better title to his own transferee. In case of 'account payee' only crossing, a direction is given to the collecting banker to collect cheque and to place the amount to the credit of the payee only.

• A special crossing makes the cheque more safe than a general crossing because the payee or holder cannot receive payment except through the banker named on the cheque.

Who can cross a Cheque

1. The drawer of a Cheque.2. Holder of the Cheque.3. The Banker in whose favor the cheque has

been crossed specially.

Meaning of Endorsement

• Sec.15- When a maker or holder writes the person’s name on the face or back of the instrument & puts his signatures thereto for the purpose of negotiation, it is called ‘endorsement’.

• “Literal meaning of the term endorsement is writing on an instrument.”

• Person who signs – endorser• To whom it is endorsed – endorsee.• A legal term that refers to the signing of a

document which allows for the legal transfer of a negotiable from one party to another.

• When an employer signs a check, they are endorsing the transfer of money from the business accounts to the account of the employee.

Essentials of valid endorsement

1. On the back or face of the instrument.2. Must be made by maker or holder.3. Must be properly signed by the endorser. 4. It must be for the entire negotiation instrument.5. No specific form of words are necessary for

endorsement.

1. Blank or General Endorsement S.16 : where endorsee simply puts his signature on the back of the instrument without writing name of the person in whose favor the instrument is endorsed.

2. Special or Full Endorsement S.16 : An endorsement with the direction to pay amount mentioned in the instrument to a specified person or his order & the endorser writes his signature under it.

3. Partial Endorsement: When an endorser is willing to transfer to an endorsee only a part of the amount of the instrument. Such an endorsement does not operate as a negotiation of the instrument.

Kinds of Endorsement

(Cont..) Kinds of Endorsement

4. Restrictive Endorsement: An endorsement is said to be restrictive if it prohibits or restricts the further negotiability of the instrument. The holder of such an instrument can only receive the payment but he cannot negotiate it further. An instrument can be made restrictive only by expressed words. E.g. Pay the contents to C only / Pay C on account of B.

5. Conditional Endorsement: It limit the liability of the endorser. E.G. – “ Pay A or order on his marrying B”. It is of four Categories

a) Sans Recourse: By adding these words after the endorsement, the endorser declines to accept and liability on the instrument of any subsequent party.

b) Sans Frais: These words when added at the end of the endorsement, indicate that no expenses should be incurred on account of the bill.

c) Facultative: When it is desired to waive certain right, the appropriate words are added to indicate the fact, e.g., “notice of dishonor dispensed with”.

d) Contingent: The endorsement depends upon happening of a specific event, which may/ may not happen.

Effects of Endorsement

• The property in instrument is transferred from endorser to endorsee.

• The endorsee gets right to negotiate the instrument further.

• The endorsee get the right to sue in his own name to all other parties.

Classification of Negotiable Instruments

• Bearer Instruments S.13– An instrument which is expressed to be payable to

bearer or an instrument on which the last endorsement is in blank. Promissory note can not be made payable to bearer. Bill of exchange- can not be made payable to bearer on demand.

• Inland Instrument S.11– Both made and payable in India– must be drawn in India upon a person resident in India

although it may be payable outside India.

• Foreign Instrument S.12– drawn in India upon a person resident outside India

and made payable outside India, or– drawn outside India and payable in India.

(Cont..) Classification of Negotiable Instruments

• Order Instrument – An instrument payable to a specified person or his

order. Order instrument can be transferred by endorsement and delivery.

• Time / Usance Instrument– which is payable after a fixed period / on a

specified day/ after sight/ on happening of an event which is certain to happen.

• Instrument payable on demand– It is made payable 'on demand' or 'at sight' or 'on

presentation’

• Fictitious bill S.42– when the name of the drawer or the payee or

both is fictitious in a bill, the bill is called a fictitious bill

(Cont..) Classification of Negotiable Instruments

• Escrow– when a negotiable instrument is delivered

conditionally or for a special purpose• Ambiguous instrument S.17– faulty draft instrument

• Accommodation bill S.43– a bill drawn, accepted or indorsed without any

consideration Provision relating to such bills: -

– The accommodated party cannot, after he has paid the amount of the bill, recover the amount from any person who become a party to the bill for his accommodation.

– The person who become the holder of such a bill in good faith and for consideration, after maturity, may recover the amount from any prior party.

(Cont..) Classification of Negotiable Instruments

• Inchoate/ Incomplete Instrument S.20– incomplete instrument– A person, who has signed & delivered to another a

stamped but otherwise inchoate instrument , is precluded from asserting, as against a holder in due course, that the instrument has not been filled in accordance with the authority given by him, the stamp being sufficient to cover the amount(sec.20).

• Conditions for an inchoate instrument:- – A person signs a negotiable instrument.– The negotiable instrument is stamped.– The negotiable instrument is either wholly blank or is

partially blank.– The person signing such negotiable instrument delivers it to

another person.

• Legal effect:- The holder gets a prima facie authority to make or complete the negotiable instrument.

Bills in Sets

• A bill of exchange is sometimes drawn in parts, especially when it has to be sent from one country to another. Such bill drawn in parts are known as ‘Bill in a Set’ & each part of the set is called VIA.

• Each bill must be numbered• Entire bill is extinguished when the payment is

made• The drawer must signed in each part of the bill

Maturity of a Negotiable Instruments {Sec. 22} / Days of

Grace Maturity of a Negotiable Instrument {Sec. 22} – Meaning:- It means the date on which the

negotiable instrument falls due for payment.Days of grace:-– A negotiable instrument which is payable

otherwise than on demand is entitled to 3 days of grace.

Calculation of days of maturity {Sec. 23 to 25}

CASE DATE OF MATURITY

Negotiable instrument payable on a specified day

Specified day + 3rd day

Negotiable instrument payable on a stated number of days after date

Date on which negotiable instrument is Drawn + stated number of days + 3rd day

Negotiable instrument payable on a stated number of days after sight

Date on which negotiable instrument is presented for sight + stated number of days + 3rd day

Negotiable instrument payable on a stated number of days after happening of a certain event

Date on which such event happens + stated number of days + 3rd day.

Negotiable instrument payable on stated number of month after date.

Corresponding day of the relevant month (i.e., date on which negotiable instrument is drawn + stated number of month) + 3rd day

CASE DATE OF MATURITY

Negotiable instrument payable on stated number of month after sight

Corresponding day of the relevant month (i.e., Date on which negotiable instrument is presented for sight + stated number of months) + 3rd day.

Negotiable Instrument payable on stated number of months after happening of a certain event

Corresponding day of the relevant month (i.e., Date on which such event happens + stated number of months) + 3rd day

If the day of maturity of negotiable instrument is a public holiday

Immediately preceding business day

If the day of maturity of negotiable instrument is an emergency or unforeseen public holiday

Immediately succeeding business day

Note:- If in the relevant month, there is no corresponding day, the last day of such month shall be taken.

Payment in Due Course S.10 Payment in Due Course S.10 means payment

in accordance with the APPARENT TENOR of the instrument in good faith & without negligence of any person in possession thereof under circumstances which don't afford a reasonable ground for believing that he is not entitled to receive payment therein mentioned.

Must satisfy the following conditions :

1) Payment must be in accordance with the apparent tenor of the instrument

2) Payment must be made in good faith and without negligence

3) Payment must be made to the person in possession of the instrument

4) Payment must be made to the person entitled to receive.

5) Payment must be made in money only.

THE PAYING BANKER

• The 'paying banker' is a term used to denote the position and duties of the drawee-banks in paying cheques of their customers. Thus, 'paying banker' is a banker upon whom a cheque is drawn.

DUTIES AND RESPONSIBILITIES OF A 'PAYING-BANKER’:

• The drawee of a cheque having sufficient funds of the drawer in his hands must pay the cheque when duly required so to do. In default of such payment, the paying bank must compensate the drawer for any loss or damage caused by such default

• Protection in case of crossed cheques S.126 A banker paying the cheques crossed generally to a

banker or to the specified banker, is protected even if it turns out to be a payment to a wrong payee.

When banker must refuse paymentA paying banker must refuse payment on cheques if

any of the following circumstances exist:– Where the customer countermands the payment (stopped by the

drawer)– On receipt of a notice of customer's death– On customer's becoming insolvent– On receipt of a notice of the customer's insanity– On receipt of Garnishee order– On assignment of Credit balance– On suspicious misuse by trustee

When banker may refuse payment– Where the cheque is post-dated.– Where the funds of the customer are insufficient. – Where a cheque is not duly presented. – Not properly signed joint holders– Material alteration or irregularity– Presented after validity period

THE COLLECTING BANKER• One of the principal functions of a banker is to

receive instruments from his customer in order to collect the proceeds and credit them to his customer's account. When acting in this capacity he is called a "collecting banker".

While collecting his customer's cheques, a banker acts either:

a) Banker as Holder for value - When, to oblige a customer, a bank pays the proceeds of a cheque drawn upon another banker, before collection, he is treated as a holder for value. Similarly, where, a customer pays in a cheque and the banker expressly or impliedly permits him to draw against it before it is cleared, the banker will be regarded as a holder for value.

b) Banker as Agent - A collecting banker acts, as an agent of the customer if he credits the customer's account with the amount of the cheque after it is actually realized.

Duties and Responsibilities of a Collecting Banker:

• Due Care and Diligence in Collection of Cheques • Presentation for payment by the next working day

after the receipt of the cheques. • Notice of Dishonor

Bank Draft Sec 85A

a. It is an order drawn by an office of a bank upon another office of the same bank.

b. It is an order drawn by one person upon himself

c. S.131A specifically provides that the provisions of S.123 to S.131 shall apply to any Drafts defined U/s. 85A.

Parties to a Negotiable Instrument/ Capacity of parties

• Minor S.26• Unsound mind person• Corporations- up to the limit of MOA• Agent S.27• Joint family system• Partners

HOLDER S.8

Sec.8 The Holder of a Promissory note, B.O.E or CHEQUE

means any person entitled in his own name to the possession thereof, and to receive or recover the amount due thereon from the parties thereto. 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.

1) The person must be entitled to receive payment or receive the amount by filling a suit in his own name against other parties to negotiate the instrument giving a valid discharge.

2) In case instrument is lost from the person who was entitled to receive the payment, the subsequent finder does not become it’s owner. Only the person who was entitled to receive the payment initially is the real owner.

3) The person must have a legal right to possess the instrument in his own name.

HOLDER IN DUE COURSE S.9

Sec.9Any person who for consideration becomes the

possessor of the promissory note, B.O.E or Cheque before the amount mentioned in it becomes payable & without having sufficient cause to believe that any defect existed in the title of the person from whom he derives his title.

When does a person becomes a Holder in due course -Before the amount mentioned in the instrument

becomes payable.1) Without having sufficient cause to believe that

any defect exists in the title of the person from whom, he derives his title

2)He becomes a possessor of a promissory note, b.o.e or cheque .

3)If it is payable to the bearer.4)Consideration has passed from him.

Illustration:- A is a payee for a valuable consideration of a bill payable to order. He gets this instrument from B without knowledge of any defect in B’s title & its maturity.

In this e g. A is a holder in due course.

Privileges of Holder in due course

1)Inchoate stamped instrument:(Sec.20)- A person, who has signed & delivered to another a stamped but otherwise inchoate instrument , is precluded from asserting, as against a holder in due course, that the instrument has not been filled in accordance with the authority given by him, the stamp being sufficient to cover the amount

2)Liability of prior parties:(Sec.36)- Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.

3)Fictitious payee:(Sec.42)- Where a bill is drawn payable to the drawer’s order in fictitious name & is indorsed in the same hand as the drawer’s signature, the acceptor is not relieved from liability to any other holder in due course, on the plea that the drawer is fictitious

Contd -4) Conditional delivery: S.46- If a bill or not is

negotiated to a holder in due course, the other parties to the instrument cannot avoid liability on the ground that the delivery of the instrument was conditional or for a special purpose only.

5) Instrument cleansed of all defects: S.53- Once a negotiable instrument passes through the hands of a holder in due course, it gets cleansed of its defects provided the holder was himself not a party to the fraud or illegality which affected the instrument in some stage of its journey. Thus any defect in the title of the transferor will not affect the rights of the holder in due course even if he had knowledge of the prior defect provided he himself is not a party to the fraud.

Example: A, by fraud, induces B to make a promissory note in his favour. He indorses the note to C, who take it as a holder in due course. C subsequently indorses the note to A, for value. A cannot sue B on the note as he himself is a party to the fraud .

Contd -

6) Estoppel against denying the original validity S.120

7) Estoppel against denying the capacity of payee to endorse S.121

Difference between Holder and HDCBASIS HOLDER HDC

Consideration A person becomes a holder even if he obtains the negotiable instrument without any consideration.

A person becomes HDC only if he obtains the negotiable instrument for consideration.

Before maturity

A person becomes a holder even if he obtains the negotiable instrument after the maturity of the negotiable instrument.

A person becomes HDC only if he obtains the negotiable instrument before its maturity.

Good Faith A person becomes the holder, even if he does not obtain the negotiable instrument in good faith.

HDC, a person who obtain the negotiable instrument on good faith.

Privileges A holder is not entitled to the privileges, which are available for HDC.

A HDC is entitled to various privileges as specified under the negotiable instrument act, 1881.

Right to use A holder can not sue all the prior parties.

A HDC can sue all the prior parties.

66

Negotiation S.14

“It is a process of transferring the ownership, right, title, interest of a person in a negotiable instrument to another person so as to give a good title to the transferee and make a transferee a holder of such instrument.”

Negotiation does not mean a simple transfer. Simple transfer may not necessarily involve the transfer of property in the negotiable instrument but negotiation implies the transfer of property or ownership.

E.g. X hands over a cheque to Mr. Y here Mr. X has negotiates the instrument. But if he hands over a cheque to Mr. Y asking him to keep the same in his safe, the cheque is not negotiated to Mr. Y, Mr. Y does not become its holder but only a bailee.

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Modes of Negotiation

• Negotiation by delivery S.47– The negotiable Instrument is transferred by delivery, actual or constructive.” It is physical act of delivering the instrument or handing over the delivery, actual possession of the instrument is not passed.

• Negotiation by endorsement and delivery S.48– The negotiable Instrument payable to order is negotiable by the holder by endorsement and delivery thereof. The delivery must be voluntary.Kinds of Delivery

Actual (change hands physically) Constructive (through Agent/ servant) Conditional / for a specific purpose

Assignment• The term assignment may be defined as the

transfer of one’s right to recover payment of a debt. The effect of assignment of an instrument as an actionable claim under the transfer of property act also amounts to its transfer from one person to another. In such a case the assignee gets the rights of a holder but not of a holder in due course.

Distinction between Negotiation and AssignmentBasis Negotiation Assignment

Applicable Act

If a negotiable instrument is transfer by way of negotiation, Negotiable Instrument Act, 1881 applies.

Where any right is transferred by way of assignment, the Transfer of Property Act applies.

Meaning Negotiation means transfer of a negotiable instrument to any other person so as to constitute that person the holder of such negotiable instrument.

Transfer of a right to receive the payment of a debt by one person (viz., assignee) to another person (viz., assignee) by way of a written document is called as assignment.

Scope Negotiation can be made for transferring negotiable instrument only.

Assignment can be made of any right.

Method or manner

A bearer instrument can be negotiated merely by deliver, and an order instrument can be negotiated by endorsement and delivery.

Assignment is valid only if it is made in writing and is signed by the assignor.

Contd.. Distinction between Negotiation and Assignment

Basis Negotiation Assignment Notice Notice of negotiation is

not required to be given to any party.

Notice of assignment must be given by the assignee to the debtor.

Consideration

It is presumed that every negotiable instrument was negotiated for consideration.

There is no such presumption in case of assignment.

Better title

The transferee of a negotiable instrument acquires a title better than that of the transferor, i.e; he becomes a holder in due course.

The assignee does not acquire a title better than that of the assignor.

Stamp duty

Negotiation does not require payment of stamp duty.

Assignment requires payment of stamp duty.

Negotiation Back Sec. 90

Meaning: When an endorser, after he has negotiated an

instrument, again becomes a holder before its maturity, the instrument is said to be negotiated back to that holder.

Effect:• In a negotiation back, none of the intermediate

holder/ endorsers is liable to the holder.• The general rule, that a holder in due course may

sue all prior parties to the instrument does not apply.

• However, where a prior party has excluded its liability on the instrument and the negotiable instrument is negotiated back to him, he may sue all intermediate endorsers.

Conversion of Endorsement in Blank into Endorsement in Full

Meaning:If an instrument has been endorsed in blank,

any holder may, without signing his own name, write some person’s name above the endorser’s signature and so convert the endorsement in blank into an endorsemnt in full. The holder doesn't thereby incur the responsibility of an endorser S.49

Effect of Endorsement in Full after a Blank one S.55

• An instrument endorsed in blank is payable to the bearer, although originally it was payable to order. If an instrument after having been endorsed in blank is endorsed in full, the endorsee in full does not incur the liability of an endorser, so the amount of it cannot be claimed from him.

• In other words, if an endorsement in blank is followed by an endorsement in full, the instrument still remains payable to bearer and negotiable by delivery as against all parties prior to the endorse in full, though the endorser in full is only liable to a holder who made title directly through his endorsement and the persons deriving title through such holder.

RIGHTS AND OBLIGATIONS OF PARTIES TO AN INSTRUMENTOBTAINED ILLEGALLY

(SECTIONS 45A, 58, 59 & 60)

(a)Rights and obligations of the finder of a lost instrument: When a negotiable instrument has been lost, the finder or the endorsee from the finder is not entitled to receive the amount of it from maker, acceptor or holder, or from any party prior to such holder. He is bound to return the instrument to the real owner. But if the instrument lost by one and if it passes by delivery. Under Section 45A, the loser of the instrument has the right to apply to the drawer for a duplicate of the lost bill. If the drawer does not grant the application the loser may compel him to provide him with a duplicate.

(b)Rights and obligations of a person who had obtained an instrument by unlawful means: If an instrument is obtained from any maker, acceptor or holder by means of an offence orfraud, the possessor is not, ordinarily, entitled to receive the amount under it from such maker, acceptor or holder, or from any party prior to such holder.

Contd..c) Rights and obligations of a person who has obtained

an instrument for unlawful consideration: When an instrument has been obtained from any maker, acceptor or holder for an unlawful consideration no possessor is, ordinarily, entitled to receive the amount due thereon from such maker, acceptor or holder or from any party prior to such holder. The consideration may be unlawful either because it is immoral and contrary to public policy or because it is specially interdicted or prohibited by the statute.

d) Effect of forgery (Forged Instruments): Where a signature on a negotiable instrument has been forged, it become a nullity: The property in the instrument remains vested in the person who is the holder at the time when the forged signature was put on it. The holder of a forged instrument can neither enforce payment thereon nor give a valid discharge therefore. In the event of the holder being able to obtain payment in spite of forgery, he cannot retain the money. The true owner may sue in tort the person who had received. This principle is universal in character, by reason whereof even a holder in due course is not exempt from it. Forgery is not capable of being ratified.

Contd.. Effect S.55

• For example, X is the payee holder of a bill of exchange. X endorsee it in blank and delivers it to Y who endorses it in full to Z or order Z, without endorsement, transfers the bill to F. In view of Section 55, F as the bearer of the instrument can receive payment or sue the drawer, acceptor or X but not Y or Z who is a subsequent but not a prior party. But there is an exception to this rule. The person to whom it has been endorsed in full, or any one who derives title through him, can claim the amount from the endorser in full.

Presentment Presentment means showing the

instrument to the drawee, acceptor or maker for acceptance, sight or payment.

Three kinds of presentment-Presentment of BOE for acceptance-Presentment of Promissory Note for sight-Presentment of Negotiable Instrument for payment

Presentment for Acceptance

It is only bills of exchange that require presentment for acceptance and that too not all but certain kind of bills only. Bill payable on demand or on a fixed date need not be presented for acceptance.

Essentials of a valid acceptance• It must be in written on the bill• It must be signed by the drawee personally or by an

agent• The accepted bill must be deliver to the holder

Modes of acceptance1. General acceptance - Accept the bill without any

condition2. Qualified acceptance - Accept with some qualified

conditions -Conditional, Partial, Place, Time, Accepted by some of the

Drawee’s.

A bill of Exchange may be accepted by the

following persons:(a)Drawee, i.e., the person directed to pay.(b) All or some of the several drawees when the bill is

addressed to more drawees than one.(c) A drawee in case of need.(d) An acceptor for honour.(e) Agent of any of the persons mentioned above.(f) When no drawee has been named in a bill but a

person accepts it, then he may be stopped from denying his liability as an acceptor.

Acceptance is ordinarily made by the drawee by the signing of his names across the face of the bill and by delivery. Acceptance, therefore, means the signification of assent to the order of the drawer by delivery or notification thereof.

When Presentment for Acceptance is Excused

When the drawee cannot be foundWhere the drawee is dead or insolventWhen the drawee is a fictitious personAlready the acceptance is refused

Acceptor for HonorIf a bill is dishonored due to non-acceptance the

holder may allow any other person to accept it for the honor of the drawer or for anyone of the endorsers. The person so accepting the bill is called “Acceptor for Honor”.

Conditions for valid acceptance for honor: (i) that the bill has been noted or protested for non-

acceptance or better security.(ii) that such an acceptance has been made with the

consent of the holder,(iii)that the acceptor for honour is not already liable on

the bill,(iv)that the acceptance is for the honour of any party

already liable on the bill; and(v) that the acceptance is by writing on the bill.

Rights and Liabilities of Acceptor of Honor: Section 111 of the Act states that an acceptor for

honour binds himself to all parties subsequent to the party for whose honour he accepts to pay the amount of the bill if the drawee does not. But an acceptor for honour is not liable to the holder of the bill unless it is presented or (in case the address given by such acceptor on the bill is a place other than the place where the bill is made payable) forwarded for presentment not later than the day next after the day of its maturity. Moreover, an acceptor for honour cannot be charged unless the bill has been presented at its maturity to the drawee for payment and has been dishonoured by him and noted or protested for such dishonour (Section 112).

Present for Sight• It is necessary only in case of a promissory note

which is made payable at a certain period after sight so that the maturity of the note may be ascertained.

• A promissory note, payable at a certain period after sight, must be presented to the maker thereof for sight by a person entitled to demand payment, within a reasonable time after it is made and in business hours. In default, no party thereto is liable thereon to the person making such default.

Presentment for Payment

• Any instrument must be presented for payment to the maker, acceptor or drawee thereof respectively, by or on behalf of the holder as provided.

• In default of such presentment, the drawer & endorser would be discharged from their liability to holder.

• If authorized by agreement or usage, a presentment through the post office by means of regd letter is sufficient. S.64

Rules regarding Presentment for

Paymenti. By whom and to whom presentment is to be

made: Presentment is to be made either by the holder or

by somebody on behalf of the holder. Promissory notes are to be presented to the maker; bills of exchange are to be presented to the acceptor; and cheque are to be presented to the drawee.

ii. Time of presentment for payment: (a) Presentment should be made during the usual

business hours (Section 65).(b) If the bill is made payable a specified period after

date or sight, it must be presented for payment at its maturity (Section 66).

(c) If the bill is payable on demand, it must be presented for payment within a reasonable time after its receipt by the holder (Section74).

Contd..iii. Place of presentment for payment:

(a) If the bill is drawn or accepted payable at a specified place and not elsewhere, it must be presented for payment at such a place in order to charge any party to the bill (Section 68)

(b) If, however the bill is accepted payable at a special place (the word “and not elsewhere” being omitted) then to chargethe drawer (but not the acceptor), presentment should be made at the place specified (Section 69)

(c) If no place of payment is specified then the bill should be presented for payment at the place of business (if any) or the residence of the drawee or acceptor or (if he has no fixed place of business or residence) to him in person wherever he can be found (Sections 70 and 71).

iv. Presentment of promissory note payable by installment (Section 67):

A promissory note payable by instalments must be presented for payment on the third day after the date fixed for payment of each installment.

Contd..v. Presentment of cheque to drawer (Section 72): It is the duty of the holder of cheque to present it

at the bank upon which it is drawn. If payment is refused by the bank, theholder may sue the drawer.

vi. Presentment of cheque to charge any other person (Section 73):

It may be recalled that in order to charge the drawer, the cheque must be presented before the relation between the drawer and his banker has been altered to the prejudice of the drawer, but in order to charge any person other than the drawer the cheque must be presented within a reasonable time.

vii.Presentment of instrument to agents, etc. (Section75):

Presentment for acceptance or payment may be made not only to the drawer maker or acceptor but also to his duly authorized agent or where he is dead to his legal representative, or where he has been declared an insolvent, to his assignee.

When Presentment of Payment is Unnecessary (Section 76)

a) No presentment for payment is necessary in any of the following cases;(1) if the maker, of acceptor intentionally prevents the

presentment of the instrument; (2) if the instrument being payable at his place of business, he

(i.e., maker, drawer or acceptor) closes such place on a business, day during the usual business hours;

(3) if the instrument being payable at some other specified place, neither he nor any person authorized to pay it attends at such place during the usual business hours;

(4) if the instrument not being payable at any specified place, he (i.e., maker, etc.) cannot after due search be found.

(b) No presentment for payment is necessary as against any party sought to be charged with payment, if he has engaged to pay notwithstanding non-presentment.

Contd…(c) No presentment for payment is necessary as

against any party if, after maturity and with the knowledge that instrument has not been presented.

(d) (1)He makes a part-payment on account of the amount due on the instrument; or

(2) he promises to pay the amount due thereon in whole or in part; or

(3) he otherwise waives his right to take advantage of any default in presentment for payment. When we say that no presentment for payment is necessary, we mean thereby the instrument is taken as dishonoured at the due date for presentment even though it has not been presented. The result is that the holder may sue the party liable without presentment and the plea that the instrument was not presented for payment is no defense to the claim of the holder.

Dishonor by Non-Acceptance (Section 91)

A bill may be dishonored by non-acceptance or by non-payment

1) When the drawee does, not accept it within 48 hours from the time of presentment for acceptance;

2) When presentment for acceptance is excused and it remains unaccepted;

3) When the drawee is a person incompetent to contract;

4) When the drawee could not be found after a reasonable search.

5) Where the acceptance is qualified;6) Where one or more of the several drawees refuse

to accept the bill.

Dishonour by Non-Payment (Section 92)

• An instrument is said to be dishonoured by non-payment when the acceptor of a bill, the maker of the note or the drawee of a cheque, makes default in payment upon being duly required to pay the same. S.92.

• An instrument is also dishonoured for non-payment when presentment for payment excused and the instrument, when overdue, remains unpaid, under Section 76 of the Act.

Notice of Dishonour(Sections 93 -97)

When a negotiable instrument is dishonoured by non-acceptance or non-payment, the holder must give notice of dishonour to the drawer and all other parties whom he seeks to make liable. Each party receiving notice of dishonour must in order to render any prior party liable to himself give notice of dishonour to such party within a reason able time after he has received it. The notice may be oral or in writing though for safety it is advisable to give a written notice.

• Notice by whom– Notice by holder or any prior party S.93– Chain method of giving notice S.95– Notice by principal or agent S.96

• Notice to whom– Notice to all parties whom the holder seeks to make liable S.

93– Notice to party or his agent or legal representative or

assignee S.94, 97

Forms & Rules for giving Notice of Dishonour

Effect of non-service of notice: If a notice is not sent to any prior party who is entitled

to such notice within a reasonable time, he is discharged from liability. It is a condition precedent to the continuation of the liability of the drawer under Section 30 and of the endorsee under Section 35 of the Act that they should be notified of the dishonour.

Requirements of valid notice : The holder must inform the party to whom the notice

has been given that the instrument has been dishonoured, and that he will be held liable thereon. It must give an exact description of the instrument dishonoured, for mis-description which misleads the addressee, vitiates the notice.

(Contd..)

Mode of service of notice : • Notice of dishonour may be oral or written.• It may be sent even by post. Even though no form is

prescribed it must clearly indicate that the instrument has been dishonoured and that the party will be liable on the instrument.

• Notice must be given to the address specified on the instrument or place of business or at his residence.

• When the holder of the instrument and the party to whom notice is given, carry on business or live in different place, the notice of dishonour must be posted by the next post if the parties carry on business or live in the same place, it is sufficient if the notice is so dispatched that it reaches its destination on the day next after the day of dishonour.

When notice of dishonour is Unnecessary (Section 98)

1) When the party charged would not suffer damage for want of a notice.

2) When the party entitled to notice cannot after reasonable search be found.

3) Where there has been accidental omission to give the notice, provided the omission has been caused by an unavoidable circumstances, e.g., death or dangerous malady of the holder or his agent, or other inevitable accident.

4) When one of the drawers is acceptor. From this, it is also possibleto deduce a further rule that notice of dishonour is not necessary for charging the drawer.

5) In the case of promissory note which is not negotiable,

(Contd..) Section 98

6) When the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.

7) When it is dispensed with by the party entitled thereto.

8) When the payment has been countermanded by the drawer or endorser.

Duties of Holder upon Dishonor

• When the negotiable instrument is dishonoured, the holder must give a notice to all the prior parties whom he wants to make liable on the instrument S.93

• When the negotiable instrument is dishonoured, the holder may cause such dishonor to be noted by a Notary Public upon the instrument( Noting - S.99). The holder may also, within a reasonable time of the dishonor of the note or bill, get instrument protested by the Notary Public (Protesting-S.100).

• Suit for recovery of money due after the formality of noting & protesting is gone through.

NOTING• Noting is a convenient method of authenticating the fact of

dishonour. Where an instrument is dishonoured, the holder, besides giving the above notice, should get the bill or promissory note 'noted' by the notary public.

• The notary public presents the instrument, notes down in his register date of its dishonour and the reason, if any, given by the acceptor. If the instrument has been expressly dishonoured, the reason why the holder treats it as dishonoured and the notary's charges should be mentioned. 'Noting' must be made within a reasonable time after dishonour.

• Noting is not compulsory in the case of an inland bill or note, but foreign bills must be protested, if s required by the law of the place where drawn.

Contents of Noting-The fact of dishonour-The date of dishonour-The reasons of dishonor-The notary charges

PROTESTINGThe protest is the formal notarial certificate attesting

the dishonour of the bill and based upon the noting. After the noting has been made, the formal protest may be drawn up by the notary at his leisure. When the protest is drawn up it relates back to the date of noting.

A protest to be valid must contain the following particulars:

1) The instrument itself, or a literal transcript thereof.2) The names of the parties against whom the instrument is

protested.3) The fact and reason/reasons for dishonour.4) Place and time of dishonour or refusal to give better

security.5) Signature of the notary public.6) In the event of an acceptance for honour or of a payment

for honour, the name of the person by whom or the person for whom, and the manner in which, such acceptance or payment was off ered and effected.

Liability of Drawee of Cheque (Section 31)

• The drawee of the cheque is always a banker. It is the duty of the banker to pay the cheque, provided he has in his hands sufficient fund of the drawer and the funds are properly applicable to such payment.

• If any trustee opens an account the banker is entitled to refuse to pay cheques drawn for purposes other than those of the trust.

• Trust money is not properly applicable to the payment of a cheque drawn in breach of trust. If the banker refuses payment without sufficient cause being shown, he must compensate the drawer for any loss caused by such improper refusal. The bank is required to compensate, not the holder, but the drawer. The amount of compensation, that the drawee would have to pay to the drawer is to be measured by the loss or damage say loss of credit, suffered by the drawer). The principle is: “The lesser the value of the cheque dishonoured, the greater the damage to the credit of the drawer”.

Contd...In addition to such a general right, a banker will

be justified or bound to dishonour a cheque in the following cases:

1) If a cheque is undated.2) If the instrument is inchoate or not free from

reasonable doubt. 3) If it is stale, that is if it has not been presented within

reasonable period, which may vary three months to a year after its issue dependent on the circumstances of the case.

4) If the cheque is post-dated and presented for payment before its ostensible (apparent/ declared) date.

5) If the customer’s funds in the banker’s hands are not ‘properly applicable’ to the payment of cheque drawn by the former.

6) If the customer has credit with one branch of a bank and he draws a cheque upon another branch of the same bank in which either he has account or his account is overdrawn.

Contd...7) If the bankers receive notice of customer’s

insolvency or lunacy8) If the customer countermands the payment of

cheque for the banker’s duty and authority to pay on a cheque ceases

9) If a garnishee or other legal order from the Court attaching or otherwise dealing with the money in the hand of the banker, is served on the banker

10)If the authority of the banker to honour a cheque of his customer is undermined by the notice of the latter’s death. However, any payment made prior to the receipt of the notice of death is valid

11)If notice in respect of closure of the account is served by either party on the other

12)If it contains material alterations, irregular signature or irregular endorsement.

DISHONOUR OF A CHEQUE ON GROUNDS OF INSUFFICIENCY OF FUNDS [Sections 138 to

142]• Section 138-142 of the Negotiable Instruments Act provide

for criminal penalties in the event of dishonour of cheques for insufficiency of funds. The drawer, under Sec. 138, may be punished with imprisonment up to 2 years (earlier I year) or with a fine up to twice the amount of the cheque or with both.

• In order to attract the aforesaid penalties, following conditions must be satisfied:1) Insufficiency of funds 2) Payment against an enforceable debt. S.1393) Cheque should be presented to the paying bank within the

validity period (generally 3 months from the date on which it is drawn)S.138

4) Payee to serve Default Notice, demanding payment within 30 days

5) Drawer liable upon failure to pay within 15 days of receipt of notice.

• The payee having failed to receive the payment within 30 days` of notice of dishonour of the cheque, shall have to make a police complaint in this regard. This is a cognizable offence and shall be tried by a Metropolitan Magistrate or a Judicial Magistrate of the First Class and punishable U/s 138.

Offences by Companies• A director, manager, secretary or other officer of the

company shall be liable to be proceeded against and punished accordingly in case the offence has been committed with the consent or connivance, or is attributable to any neglect on his part in this regard.

• However, a person will not be liable in a case.a) Where such person proves that the offence was

committed without his knowledge, orb) Where he had exercised all due diligence to

prevent the commission of such offence;c) Where he is nominated as a Director of a company

by the Central Government or State Government or financial institutions.

MATERIAL ALTERATION• An alteration is called as material alteration if

it alters-– the character or operation (i.e. the legal effect) of

a negotiable instrument, or– the rights and liabilities of the parties to a

negotiable instrument.– the operations of the instrument.

E.g.: Alteration regarding-– Date,– Time of payment,– Place of payment,– Sum payable– Opening a crossed cheque,– Relationship between parties,– Converting an order cheque into a bearer cheque.

Effect of a Material Alteration

(Sec. 87)• Any material alteration of a negotiable instrument renders the same void as against anyone who is a party there at the time of making such alteration and does not consent thereto.

• But, a material alteration is valid, if it was made so as to carry out common intention of the original parties

Alteration Authorized by the Acta) Filling blanks of an inchoate instrument S.20,b) Conversion of blank endorsement into endorsement

in full S.49,c) Crossing of Cheques S.125,d) Conversion a General Crossing into Special Crossing,

like addition of word “A/c payee” or “Not Negotiable”.e) Cancelling the word bearer and making cheque

payable to order.f) Alternation made with the consent of the parties.

METHODS OF DISCHARGE OF A NEGOTIABLE INSTRUMENT

• An instrument is said to be discharged when all rights of action under it are completely extinguished and when it ceases to be negotiable.

Modes of discharge:By payment in due courseBy party primarily liable becoming holder - when

the maker or the acceptor becomes the holder of the instrument.

By express waiverBy cancellationBy discharge as a simple contract

Modes of Discharge of a Party to a Negotiable Instrument

from LiabilityBy paymentBy cancellation S.82(a)By release S.82(c)By allowing drawee more than 48 hours S.83By non-presentment of cheque S.84Cheque payable to order S.85By operation of lawBy Material Alteration

The End