User:Sukhpreet Singh1

=                         Negotiable Instrument =

Definition :
According to the Negotiable Instrument Act, 1866, section 13 " A negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer". The negotiable instrument act governs the usage of these negotiable instruments b/w two parties.

The Negotiable Instrument Act, 1881
The Negotiable Instrument Act was introduced in 1881 and the title of act is The Negotiable Instrument Act, 1881. The Act was extended to the whole India except Jammu and Kashmir and it shall come into force on the first day of March,1882. The Negotiable instrument act which was introduced in 1881, was amended in year 1988 to include cheque defaulters. The amendment of 1988 helps in controlling the dishonoring of cheques by specifying it a a criminal activity. The latest amendments are in this Act are introduced in two new provisions, section 143A and section 148. The provisions are address to the issue of cheque bounce cases and provide greater protection to to the payee.

Presumptions of Negotiable Instrument Act
According to section 118 of The Negotiable Instrument Act, 1881


 * Consideration
 * Future Date
 * Time of Acceptance
 * Time of Transfer
 * Order of Endorsement
 * Signature and Stamp
 * Holder presume to be Holder in due course

Types Of Negotiable Instrument
According to the Act the Three main types of Negotiable Instruments are


 * Cheque
 * Bill of Exchange
 * Promissory Note

Cheque :
The cheque is defined in the section 6 of the act and cheque is a bill of exchange drawn on a specific banker and not expensed to be payable otherwise on demand

Types of Cheque

 * Open Cheque : Open cheque is used in a day to day works
 * Cross Cheque : In which cheque two lines will be drawn on the corner of the cheques
 * Stale Cheque : If the cheque is presented for payment after 3 months of payment date
 * Mutilated Cheque : If cheque will be distroy by anything like ink, coffee etc.
 * Post - dated Cheque : In banking post- dated cheque is a cheque written by drawer for a date in future.
 * Anti-dated Cheque : In banking these cheque refers to the cheque which has been wriiten by drawer in past date.

Bill Of Exchange :
It is an Instrument in writing 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 or to the bearer of the instrument. It is defined in section 5 of Act.

Parties in Bill of Exchange

 * Drawer
 * Drawee
 * Payee

Features

 * Only three parties
 * It must be in written
 * Unconditional
 * Certain sum of amount
 * Drawer visibility is secondary
 * On order

Promissory Note :
It is financial instrument used in landing transactions. It is a written promise from a borrower to repay a specific amount of money to lender within time specified.

Parties of Promissory note

 * Drawer
 * Drawee

Features

 * It must be in writing
 * Only two parties
 * Maker visibility is primary
 * Unconditional
 * Signed by drawer
 * It must be accepted by the drawee
 * Sum of amount must be certain

Conclusion
It is an instrument related with financial instrument.it is using in lending and banking transaction. These instrument are used for transaction between two or three parties. Act 1881 is defined these instruments and the parties under these instruments and provide provision for the instruments and parties under the Act.