Negociable Instrument
Negotiable Instruments
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, without conditions in addition to payment imposed on the payer. Cheques or promissory notes are common examples. Negotiable instruments are often defined in legislation.Although often discussed as foundational in commercial law, their modern relevance is sometimes questioned.
More precisely, it is a document contemplated by a contract, which warrants the payment of money, the promise of or order for conveyance of which is unconditional; specifies or describes the payee, who is designated on and memorialized by the instrument; and is capable of change through transfer by valid negotiation (sale) of the instrument. When the instrument is transferred in accordance with certain conditions, the holder may become a holder in due course and be free from defenses which would apply to the original payee, such as defective goods or fraud.
Law relating to promissory notes, bills of exchange, cheques and other negotiable instruments is codified in India under the Negotiable Instruments Act, 1881. It defines promissory note, bill of exchange, cheque, foreign instrument and negotiable instrument.
Examples of negotiable instruments
(a) Negotiable instruments recognized by statute :
i) Bills of exchange ii) Promissory notes. iii) Cheques.
(b) Negotiable instruments recognized by usage or custom :
i) Hundis. ii) Share warrants. iii) Dividend warrants. iv) Banker’s drafts.
v) Circular notes. vi) Bearer debentures. vii) Debentures of Bombay port trust. viii) Railway receipts. ix) Delivery orders.
CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS
1)Freely Transferable:
A negotiable instrument is freely transferable which means that it can be transferred from one person to another easily and no legal formalities are necessary to be complied with a transfer. Usually, when we transfer any property to somebody, we are
A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, without conditions in addition to payment imposed on the payer. Cheques or promissory notes are common examples. Negotiable instruments are often defined in legislation.Although often discussed as foundational in commercial law, their modern relevance is sometimes questioned.
More precisely, it is a document contemplated by a contract, which warrants the payment of money, the promise of or order for conveyance of which is unconditional; specifies or describes the payee, who is designated on and memorialized by the instrument; and is capable of change through transfer by valid negotiation (sale) of the instrument. When the instrument is transferred in accordance with certain conditions, the holder may become a holder in due course and be free from defenses which would apply to the original payee, such as defective goods or fraud.
Law relating to promissory notes, bills of exchange, cheques and other negotiable instruments is codified in India under the Negotiable Instruments Act, 1881. It defines promissory note, bill of exchange, cheque, foreign instrument and negotiable instrument.
Examples of negotiable instruments
(a) Negotiable instruments recognized by statute :
i) Bills of exchange ii) Promissory notes. iii) Cheques.
(b) Negotiable instruments recognized by usage or custom :
i) Hundis. ii) Share warrants. iii) Dividend warrants. iv) Banker’s drafts.
v) Circular notes. vi) Bearer debentures. vii) Debentures of Bombay port trust. viii) Railway receipts. ix) Delivery orders.
CHARACTERISTICS OF NEGOTIABLE INSTRUMENTS
1)Freely Transferable:
A negotiable instrument is freely transferable which means that it can be transferred from one person to another easily and no legal formalities are necessary to be complied with a transfer. Usually, when we transfer any property to somebody, we are