This is an essential function of negotiable instruments. The negotiable instrument act, 1881 legislative department. The word negotiable has a technical meaning whereby rights in an instrument can be transferred by one person to another. Whereas it is expedient to define and amend the law. Drafts and notes are the two categories of instruments. These instruments pass freely from hand to hand and thus form an integral form part this modern businesses instruments. According to section i of negotiable instrument act, 1881 a negotiable instrument includes and means a promissory note, bill of exchange or cheque. A commercial paper, such as a check or promissory note, that contains the signature of the maker or drawer. The negotiable instruments act, 1881 xxvi of 1881 9th december, 1881 an act to define and amend the law relating to promissory notes, bills of exchange and cheques. Essential features of negotiable instruments are given below. According to section of the negotiable instruments act, 1881, a negotiable instrument means. When the british entered india, the commercial activities increased to a larger extent. A negotiable instrument means a promissory note bill of exchange or cheque payable either to order or to bearer only the above instruments are governed by ni act. According to section 1 of the negotiable instruments act, 1881ni act, a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.
Students taking ca ipcc exams or students preparing for ethics will find the file very useful. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. Article 3 in activities involving negotiable instruments, people shall comply with law, and administrative rules and regulations and shall not jeopardize public interests. The codified law in india relating to negotiable instruments thus deals, as in england, only with the. Negotiable instruments general principles purpose of codification chief purpose was to produce uniformity in the laws of the different states upon this important subject, so that the citizens of each state might know the rules which would be applied to their notes, checks, and other negotiable paper in every other state in which the law was. Thus, negotiable instrument means a document which is transferable by delivery. The word negotiable means transferable by delivery, and the word instrument means a written document by which a right is created in favour of some person. Where a negotiable instrument may be construed either as a promissory note or bill of exchange the holder may at his her election treat it as either. Whereas it is expedient to define and amend the law relating to, promissory notes, bills of exchange and cheques. The negotiable instruments amendment act, 2015 is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 8 of the negotiable instruments act, 1881. A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a. In the information technology act, 2000 hereinafter in this chapter referred to as the principal act, in section l, in subsection for clause the be substituted, namely a negotiable instrument other than a cheque as defined in section of the negotiable instruments act, 1881 26 of. Instruments like cheque, bank draft, bill of exchange, promissory notes etc.
Thus we can say negotiable instruments are transferable documents where negotiable means transferable and instrument means document. Section58 legal representative cannot by delivery only negotiate instrument indorsed by deceased section58 instrument obtained by unlawful means or for unlawful consideration section59 instrument acquired after dishonour or when overdue. The negotiable instruments act,1881 topicnegotiable instruments meaning, types. The negotiable instruments act, 1881 national portal of. The negotiable instruments act, 1881, indian bare acts at, a website for indian laws and bareacts, legal advice and law documents in india. The draft thus prepared for the fourth time was introduced in the council and was passed into law in 1881 being the negotiable instruments act, 1881 act no. Whereas it is expedient to define and amend the law relating to promissory notes, bills of exchange and cheques. Reviewer negotiable instruments law legem advocatus. A negotiable instrument is any transferable document which satisfies certain conditions. To facilitate commercial transactions, it is essential that the instrument be easily transferable without danger of being uncollectible.
The demand for money increased to a large extent, and the growing demand could be met by mere supply of coins, and the instrument of credit took the function of money which they represented. Whereas it is expedient to define and amend the law relating to. Negotiable instruments means promissory note bills of exchange or cheque payable either to order or to bearer. Definitions of a promissory note a statutory definition section 4 of the negotiable instruments act, 1881 defines the promissory note as under. An act to define and amend the law relating to promissory notes, bills of exchange and cheques. A promissory note, bill of exchange or cheque payable either to order or to bearer is called negotiable instrument how many total sections are there in the negotiable instruments act.
Negotiable instrument act 1881 promissory note scribd. A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, whose payer is usually named on the document. Negotiable instruments all negotiable instruments are governed by the provisions of our bills of exchange ordinance of 1927. Negotiable instruments represent an exception to the general rule that a person cannot give a better title than he has. Whether demand of interest along with the cheque amount in the statutory notice under section 8 of the negotiable instruments act, 1881 would make the statutory notice faulty. The ucc defines a negotiable instrument as an unconditioned writing that promises or orders the payment of a fixed amount of money. Law of banking, negotiable instruments and insurance. The act by itself has nothing to do with holidays or declaration of holidays but it is to be done by official announcement by the government as rajan associates put in, as per section 25 of the act, if.
It also has to be noted that in our country, the law relating to negotiable instruments, is governed by the negotiable instruments act 1881. Mcq on negotiable instruments act with answers in pdf. Negotiable instruments act pdf download 2019 writinglaw. The negotiable instruments act, 1881 provides for three kinds of instruments, namely. Thus, a negotiable instrument is a document by which rights vested in a person can be transferred to another person in accordance with the provisions of the negotiable instruments act, 1881. A good deal of trade and commerce these days is carried on, on the basis of written promises to pay a definite sum of money the promises can be passed on from one person to another. An act to define and amend the law relating to promissory notes, bills of. Their use was most widespread in the twelfth century and has continued till today. Negotiable instrument legal definition of negotiable. Negotiable instrument act 1881 free download as word doc. Instruments act, 1881, for at the most, section of the negotiable instruments act, 1881 states that, a negotiable instrument means a promissory note, bill of exchange or cheque payable either. Apr 19, 2020 classification of negotiable instruments negotiable instruments act1881, business law b com notes edurev is made by best teachers of b com. According to section of the negotiable instruments act 1881, a negotiable instrument means promissory note bill. The negotiable instruments act, 1881, primarily deals with promissory notes, bills of exchange and cheques.
The instruments respectively marked c, d c, g and i are not promissory notes. The term negotiable instrument as used in this law means bill of exchange, promissory note and cheque. Local extent, saving of usages relating to hundis, etc. Classification of negotiable instruments negotiable. Its a mode of transferring a debt from one person to another.
This ordinance is a verbatim reproduction of the english bills of exchange act of 1882 which is globally regarded as one of the best drafted statutes. According to section a of the act, negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer, whether. Negotiable instrument act free download as powerpoint presentation. Section of the negotiable instruments act states that a negotiable instrument is a promissory note, bill of exchange or a cheque payable either to order or to bearer. Law of banking, negotiable instruments and insurance prepared by fasil alemayehu and merhatbeb teklemedhn 3 this teaching material, which is prepared and presented in the form of a compilation, is organized in three parts based on the three areas of law it incorporates, i. The provisions of the negotiable instruments amendment act, 2015 shall be deemed to have come into force on the 15th day of june, 2015. A document used to make payments on demand and can be transferred through hand delivery is known as cheque. Whether handwritten notice would constitute a valid notice under the provisions of section 8 of the negotiable instruments act, 1881. These instruments can be transferred by way of endorsement and delivery. The negotiable instruments act, 1881 laws of bangladesh. It has been developed with an objective to enable a single window access to information and services being provided by the various indian government entities. The instrument, respectively marked a and 6 are promissory notes.
A negotiable instrument is that document that includes a promise to pay a certain amount of money to the bearer of the document. Negotiable instruments act 1881 summary is available for download at the excellent download file is in the format of pdf. Expected mcq on negotiable instruments act with answers. This document is highly rated by b com students and has been viewed 2737 times. Where the language of the instrument is ambiguous or there are omissions therein, the following rules of construction apply. It takes me a lot of time and energy to create these pdfs. Negotiable instruments meaning negotiable instrument are money or cash equivalents. This act may be called the negotiable instruments act, 1881. According to sec negotiable instruments act of 1881. Negotiable instruments act1881 a negotiable instrument acts as a substitute for money. A draft is an instrument that orders a payment to be made. Defined in section 4 of the ni act section 5 of the ni act section 6 of the ni act.
Demand drafts are also construel as negotiable instruments in the limiting case as they have the same property as n. Introduction of negotiable instruments act 1881 summary. Negotiable instruments, its party and his rights and liabilities 3. The law of negotiable instruments is governed by the bills of exchange act 1949 revised 1978. Negotiable instruments act 1881 complete act citation.
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