Nego Ppt Final

8/8/2019 Nego Ppt Final

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NEGOTIABLEINSTRUMENTS

DefinationA Negotiable instrument is one the propertyin which is acquired by anyone who takes inbona fide and for value,notwithstanding any

defect of title in the person from whom hetook it Justic willis


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NEGOTIABLE INSTRUMENTS

What is negotiable?

Negotiable means transferable.

The negotiation that goes on refers to the transfer of the

instrument between two people, or from one bank toanother, or even from one country to another.

What is an instrument?

In the broadest sense, almost any agreed-upon medium of

exchange could be considered a negotiable instrument.

In day-to-day banking, a negotiable instrument usually

refers to checks, drafts, bills of exchange, and some types

of promissory notes.


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CHARACTERISTICS OF

NEGOTIABLE INSTRUMENTS

Freely transferable

Title of holder free from all defects

Recovery

Presumption Consideration

Date

Time of acceptance

Time ofTransfer

Order of indorsements

Stamp

Holder persimed to be a holder in due course

Proof of protest


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TYPES OF NEGOTIABLE

INSTRUMENTS

1. Negotiable by Statute :

Promissory notes, Bill of Exchange and

Cheques.

2. Negotiable by custome or usage:

Government Promissory notes ,BankersDrafts and Pay Orders ,Hundis ,Delivery

orders and railway receipts for goods.


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PROMISSORY NOTES

A promissory note is an instrument in writing (not being a bank note

or a currency note) containing an unconditional undertaking, signed

by the maker , to pay a certain sum of money only to, or to order of,

a certain person, or to bearer of the instrument (Sec.4).

The person who makes the promissory note and promises to pay is

called the maker.

The person to whom the payment is to be made is called thepayee.


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Specimen of promissory notes


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Essential Elements of

Promissory notes

Writing

Promise to pay

Definite and unconditional

Signed by the maker Certain parties

Certain sum of money

Promise to pay money only

Formalities


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BILL OF EXCHANGE

A bill of exchange is an instrument in writing containing anunconditional order, signed by the maker, directing a certain personto pay a certain sum of money only to, or to the order of, a certainperson or to the bearer of the instrument (Sec 5 ).

Parties to a bill. There are three parties to a bill of exchange,

Drawer The person who gives the order to pay or who makes thebill is called the drawer.

DraweeT

he person is directed to pay is called the drawee.

Payee The person to whom the payment is to be made is calledthe payee.


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Essential Elements

It must be writing.

It must contain an order to pay.

The order must be unconditional.

It requires three parties, i.e., drawer, the drawee and the payee. The parties must be certain.

It must be signed by the drawer.

It must contain an order to pay money.

Formalities.


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CHEQUE

A cheque is a bill of exchange drawn upon a specified

banker and payable on demand (Sec.6).A cheque is

species of a bill of exchange; but it has the following two

additional qualification.

1 It is always drawn on a specified banker and

2It is always payable on demand.


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Specimen of cheque


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Distinction between a bill of

exchange and a cheque


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Making a Cheque

Marking at drawers instance

Marking at holder instnace

Marking at collecting bankers instance Crossing of cheque.


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Type of crossing

General crossing

Special crossing

Restrictive crossing

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