Scribd
Upload
26 views5 pages

Overview of Negotiable Instruments Act

Negotiable instruments are written documents that are freely transferable by delivery or endorsement and allow the holder to recover payment. The Negotiable Instruments Act of 1882 governs promissory notes, bills of exchange, and checks in India, which are considered negotiable by law. Additionally, certain instruments have become negotiable by custom, such as government promissory notes. A holder in due course takes the instrument free from defects and can sue for recovery of the amount in their own name. Negotiable instruments are presumed to be issued for consideration and bear the dates and times written unless proven otherwise.

Uploaded by

shekharmvm
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
26 views5 pages

Overview of Negotiable Instruments Act

Negotiable instruments are written documents that are freely transferable by delivery or endorsement and allow the holder to recover payment. The Negotiable Instruments Act of 1882 governs promissory notes, bills of exchange, and checks in India, which are considered negotiable by law. Additionally, certain instruments have become negotiable by custom, such as government promissory notes. A holder in due course takes the instrument free from defects and can sue for recovery of the amount in their own name. Negotiable instruments are presumed to be issued for consideration and bear the dates and times written unless proven otherwise.

Uploaded by

shekharmvm
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Negotiable Instruments

 The word “negotiable” means “transferable by


delivery.”
 “Instrument” means a “written document by
which a right is created in favour of some
person.”
According to Section 13 of the Negotiable
Instruments Act, “A negotiable instrument means a
promissory notes, bills of exchange and cheques
payable either to order or to bearer.”
 It is based, mainly upon the English Law as to
negotiable instruments and judicial decisions.
 The Act extends to the whole of India.
 The Act came into force on first day of March,
1882.
Characteristics of a negotiable instrument
1. Freely transferable: The property in a negotiable
instrument passes from one person to another by
delivery,
2. Title of holder free from all defects: A person
taking an instrument bona fide and for value,
known as a holder in due course, gets the
instrument free from all defects in the title of the
transferer.
3. Recovery. The holder in due course can sue upon a
negotiable instrument in his own name for the
recovery of the amount.
Presumptions
(a) Consideration. Every negotiable instrument is
presumed to have been made, drawn, accepted,
indorsed, negotiated or transferred, for
consideration. This would help a holder to get a
decree from a Court without any difficulty.
(b) Date. Every negotiable instrument bearing a date is
presumed to have been made or drawn on such
date.
(c) Time of acceptance. When a bill of exchange has
been accepted, it is presumed that it was accepted
within a reasonable time of its date and before
its maturity.
(d) Time of transfer. Every transfer of a negotiable
instrument is presumed to have been before its
maturity.
(e) Order of indorsements. The indorsements
appearing upon a negotiable instrument are
presumed to have been made in the order in which
they appear thereon.
(f) Stamp. When an instrument has been lost, it is
presumed that it was duly stamped.
(g) Holder presumed to be a holder in due course.
Every holder of a negotiable instrument is presumed
to be holder in due course.
(h) Proof of protest. In a suit upon an instrument
which has been dishonoured, the Court, on proof of
the protest, presumes the fact of dishonour, until
such fact is disproved.
TYPES OF NEGOTIABLE INSTRUMENTS
1. Negotiable by Law, or
2. Negotiable by custom or usage.
1) Instruments negotiable by Statute. The
Negotiable Instruments Act mentions only three
kinds of negotiable instruments.
i. Promissory notes,
ii. Bill of exchange and
iii. Cheques.
2. Instruments negotiable by custom or usage:
There are certain other instruments which have
acquired the character of negotiability by the
usage or custom of trade. In India the examples are
government promissory notes, banker’s drafts
and pay orders, hundis, delivery orders and
railway receipts for goods,

You might also like