THE NI ACT, 1881NI means a Promissory note, bill of exchange or cheque payable either to order or to the bearer of instrument. Characteristics of NI: Payable to order or bearer, Free transferability, Good title to holder from all defects and Entitlement to sue. Presumptions: Until the contrary is proved: Consideration, Date, Acceptance & transfer before maturity, Stamping, Holder is holder in due course and Good title to the transferee.PROMISSORY NOTE: Essentials: Writing, Promise to re-pay & promise must be definite and NOT implied, promise must be unconditional, parties must be certain, sum must be certain, only money, stamped & signed.BILL OF EXCHANGE: ESSENTIALS: Writing, unconditional order to pay, sum certain, money only, cannot be made to bearer, 3 parties & they must be certain, stamped, signature of drawer.

CHEQUESCharacteristics: In writing, Unconditional order, certain sum of money, payable on demand, on a specified banker. KINDS: Bearer, Order and Crossed cheques. Electronic, Truncated and Marked cheques.

CROSSING OF CHEQUES: General, Special crossing. If words NOT Negotiable added: Transferor cannot give better title to transferee, than himself.Protection to paying Banker: Payment in due course: When paid according to apparent tenor of the instrument and in good faith with out negligence, banker will be discharged.Protection to collecting banker: Act as an agent, cheques should be crossed, acts on behalf of its client , in good faith and without negligence. Right full dishonor and wrong full dishonor.

NI ACT cont..TYPES OF NI: Bearer instruments, Order, Inland, Foreign, Demand, Ambiguous (Pr. Note or Bill of Exchange) inchoate or incomplete.

PARTIES TO NI: 1) Holder: Any person entitled in his own name to the possession and to receive and recover the amount. 2) Holder in due course: Any person who has acquired NI for consideration, before the date of maturity, without notice of defective title and the instrument must be complete. PRIVILEGES OF H.D.C: Better title than the transferor, all prior defects are cleansed, protection to subsequent holders, no other party can deny the validity of NI. 3) Drawer, drawee, acceptor, payee.

TEST TEST ON 14.07.2010 SEC. A & B

TEST ON 16.07.2010 SEC. C

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