presentation on negotiable student

7/31/2019 Presentation on Negotiable Student

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Negotiable Instruments Act

(1881)

Prepared by:Harshal Naik (28)

Vivek Naik(29)

Dixita Patel(37)Sanjay Patel(43)

Sumit Sharma(55)

Submitted to:

Prof. Lalit Tank

B.Law


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Agenda of the Presentation

Negotiable Instrument & its types

Holder & Holder in due course

Dishonour of Negotiable Instrument

Discharge of Negotiable Instrument


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What is a negotiable instrument?

Negotiable means transferable from one

person to another person. The

consideration is essential for transferability. Instrument means a written document

creating a right in favour of any person.

A written document which is transferable

from one person to another person, andcreates a right in favor of any person.

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PROMISSORY NOTE

A Promissory note is an instrument in writing (not

being a bank note or currency note), containing an

unconditional undertaking, signed by the maker, to

pay on demand or at a fixed or determinable future

time, a certain sum of money only to, or to theorder of, a certain person, or to the bearer of

instrument.

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Parties to Promissory Note

MAKER: The person who makes a promissory note called maker. i.e.

debtor.

PAYEE:

The person with whom the promise to pay is made is called

payee. i.e. the creditor.

ESSENTIALS OF PROMISSORY NOTE:

In Writing

Clear Promise to Pay Promise must be unconditional

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Conti

Signature by the maker

Payment period

Certain sum of money

Certain payeeOther legal formalities:

It shall be properly and clearly written.

Date should be mentioned.

Amount should be stated both in words&figures.

It should be properly stamped.

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Parties to Bills of Exchange

DRAWER

The person who makes the bill is

called Drawer.

DRAWEE

The person who is directed to pay is

called drawee.

PAYEE

The person to whom the payments to

be made is called payee.

B.Law


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Essential features of Bills of Exchange

In Writing

Clear Order to pay

The Order must be Unconditional

Signature by Drawer

Payment Period Certain sum of Money

Certain payee

Other legal formalities:

It shall be properly and clearly written.


Amount should be stated both in words &figures.

It should be properly stamped.

B.Law


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CHEQUE

In simple term:

A written order of a depositor upon abanker to pay the designed party Or bearera specific sum of money on demand.

A Cheque is a bill of exchange drawn on aspecified banker and not expressed to be

payable otherwise than on demand.(ACCORDING TO NEGOTIABLEINSTRUMENT ACT 1881.[Section 6])

B.Law


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PARTIES OF CHEQUE

Drawer:

The person who draws the cheque is called drawer.

Drawee

The bank on which the Cheque is drawn is known as

drawee.

Payee

The Person to whom the Cheque is made payable is

known as payee.

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ESSENTIAL FEATURES

In Writing

Clear Order to pay

The order must be Unconditional

Signature by Drawer Payment Period

Maker must be Account Holder

Drawn on Specified Bank

Must be on Prescribed Performa Payment in Money Only

Date

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Conti

Other Legal Formalities:

It shall be properly and clearly written


Amount should be stated both in words &figures

B.Law


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Holder (Sec. 8)

The holder of a promissory note. bill of exchange or

Cheque means any person entitled in his own

name

The possession thereof, and

To receive or recover the amount due thereon from theparties thereto.

The holder is the person so entitled at the time of

such loss or destruction.

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Holder in due course (Sec. 9)

Any person Is a Holder in due course' if he fulfilsthe following conditions :

For consideration. he became:

The possessor of the negotiable instrument If

payable to bearer. or The payee or indorsee thereof. If payable to

order.

That he became the holder of the Instrumentbefore Us maturity. If the instrument is taken after Itis due. the person taking It has. as against theother parties, only the rights of his immediatetransferor.

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A holder of a negotiable instrument will

not be a holder in due course if

He has obtained the instrument by

gift or for an unlawful consideration

or by some illegal method ; or

He has obtained the instrument afterits maturity; or

He has not obtained the instrument

bonafide.

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Special Privileges of a Holder in Due

Course

Inchoate stamped instrument

Liability of prior parties

Fictitious payee

Negotiable instrument without consideration

Conditional delivery

Instrument cleansed of all dejects

Instrument obtained by unlawful means or for unlawful

Every holder is a holder in due course.

Estoppels against denying original validity of instrument

Estoppel against denying capacity of payee to indorse.

Indorses not permitted to deny the capacity of prior

prates

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LIABILITY OF PARTIES

Liability of drawer

Liability of drawer of Cheque

to negotiable instrumentsLiability of maker of note and

acceptor of billLiability of indorses

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DISHONOUR OF A NEGOTIABLE

INSTRUMENT

May be dishonored by non-acceptance orby non-payment.

A promissory note and Cheque aredishonored by non-payment only. When a

negotiable instrument is dishonored, theholder must give a notice of Dishonour to allthe prior parties in order to make themliable on the instrument. If he fails to do so,except in cases when notice of Dishonour

may be excused, he forfeits his right ofaction against the prior parties entitled tothe notice of Dishonour (Sec. 93).

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Dishonoured by non-payment (Sec. 92)

When the maker of the note, acceptor of the

bill or drawee of the Cheque makes default

in payment upon being duly required to pay

the same. (Sec.92).

An instrument is also dishonoured by non-

payment when presentment for payment is

excused and the instrument when overdueremains unpaid (Sec. 76).

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NOTICE OF DISHONOUR

When a negotiable instrument is dishonoured

either by non-acceptance or by non-payment, the

holder of the instrument or some party to it who is

liable thereon, must give a notice of Dishonour to

all the prior parties whom he wants to makes liableon the instrument. If he does not give notice,

except in cases when notice of dishonour may be

excused, all the prior parties liable thereon are

discharged of their liability (Sec. 93).

B.Law


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Rules for giving notice of dishonour

(Sec. 106)

If the holder and the party entitled to notice of

dishonour carry on business or live in different

cities, the notice must be dispatched by the next

post or on the day next after the day of honour.

If these parties carry on business or live in the

same place, the notice must be dispatched in time

to reach its destination on the day next after the

day of dishonour.

B.Law


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Duties of the holder upon dishonour

Notice of dishonour

Noting and protesting

Suit for money

B.Law

B Law


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Instrument acquired after notice of

dishonour

NOTING AND PROTESTING: NOTING:

Noting means the recording of the fact of dishonour by aNotary Public upon the instrument, or upon a paperattached thereto or partly upon each within a reasonable

time after dishonour(sec.99,)

Contains of Noting: The fact of dishonour

The date of dishonour

The reason, if any assigned for such dishonour.

If the instrument has not been expressly dishonoured thereason why the holder treats it as dishonoured ; and

The notarys charges (Sec. 99,).

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Protest

When a promissory note or bill of exchangehas been dishonoured by non-acceptanceor non-payment. The holder may, within areasonable time. Cause such dishonour to

be noted and certified by a Notary PublicSuch certificate is called a protest (sec.100)

Contents of PROTEST: The instrument or a literal transcript of the

instrument. The name of the person whom and against whom theinstrument has been protested.

The fact of, and reason for, dishonour. The place and time of dishonour. The signature of Notary Public.

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Advantage of protest

It affords an authentic evidence of

dishonour to the drawer and indorsers.

In a suit upon an instrument which hasbeen dishonoured, the court shall, on

proof of the protest, presume the fact of

dishonour, unless and until such fact is

disproved.

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Modes of discharge of an instrument :

By payment in due course.

By party primarily liable

becoming holder.

By express waiver.

By cancellation

By discharge as a simplecontract.

Discharge of an InstrumentsB.Law


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Discharge of Party or Parties

By payment By cancellation

By release

By allowing drawee more than forty-eight hours

BY non-presentment of Cheque Cheque payable to order

Draft drawn by one branch on another

Parties not consenting discharged by qualified

acceptance By material alteration

Discharge by payment of altered instrument

B.Law


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B.Law

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