Negotiable instruments act    Tot al sect i ons 147
Introduction• To the whole of India except Jammu and  Kashmir• The act deals with only three instruments :  – Promissory n...
What is negotiable instrument• A piece of paper which entitles a person a  sum of money.. Which can be transferred to  per...
Features of negotiable instrumentA. Consideration  A. It is presumed that every instrument is     drawn for consideration ...
Features of negotiable instrumentB. transferability:a negotiable instrument can be transferred by.a. Endorsement and deliv...
Features of negotiable instrumentC. title:a. The transferee who takes the instrument    bonafide, for value and considerat...
Presumptions- sec: 118a.   As to considerationb.   As to datec.   As to time of acceptance –before maturityd.   As to time...
Promissory note: sec 4a.   An instrument in writingb.   Contains an unconditional undertakingc.   Signed by makerd.   To p...
Characteristics of PNa.   In writingb.   Promoise to payc.   Unconditionald.   Certain sum of moneye.   Signed by makerf. ...
Other important featuresa. Can be made jointlyb. The consideration, place and date of making   need not be mentionedc. It ...
Promissory note -formatRs…….                            Place……….                                 date………..……….month/days ...
Bill of exchange sec; 5It is an instrument …    a. in writing    b. containing an unconditional order    c. signed by the ...
Bill of exchange sec; 5Amount Rs…..                Place:……..                            date: …………….month/days after date...
Features of Bill of exchangea. In writingb. Orderc. Unconditional orderd. Money only – certain sume. Acceptancef. Three pa...
Cheque: sec:6a cheque is a bill of exchange drawnon    1. a specified banker    2. not expressed to be payableotherwise th...
Cheque: sec:6                        date………..Pay…………………………………………………………………….or bearer….Rupees………………..                  Amo...
Truncated chequeThis means a cheque which istruncated during the course of aclearing cycle..a. Either by the clearing hous...
Cheque in electronic formThis means a cheque which containsthe exact mirror image of a papercheque, and is generated, writ...
Forms of cheque            Order chequeBearer cheque          Crossed cheq
Forms of chequeBearer cheque: 1. It is expressed to be payable or the last    endorsement is blank… Order cheque: a. which...
Forms of chequeCrossed cheque:A cheque which is collected onlythrough banker
Marked chequea. A cheque need not be presented for    acceptance…b. Always the drawee is liable to the   person in whose t...
Crossed chequea. When cheque bears across its face   two transverse parallel lines on top   left corner of the cheque. It ...
Crossed cheque
Types of crossingGeneral crossingA cheque contains in addition of lines the wo•   “and company” between lines• Or two tran...
Special crossing : sec: 124The two lines contains name of the bankerEither with or without the words “not negotiab SBI   …...
Note:In general crossing name of thebank is not mentioned whereas inspecial crossing the name of thebank is mentioned and ...
Not negotiable crossing: sec: 130a.This is to protect the rights of holder of  chequeb.A person taking this kind of cheque...
Account payee crossing orrestrictive crossinga.This contains the words “account  payee”b.The amount will be credited to th...
Who can cross thecheque:a.By the drawerb.After issue:  a.The holder  b.General one as special one  c.Adding the words not ...
Payment of a crossed cheque:sec: 126 to 129a.Banker is not liable if he pays it in due  course a cheque:  a.Crossed genera...
Payment of a crossed cheque:sec: 126 to 129b. If the payment is made out of duecourse, the banks shall be liable to thetru...
Payment in duecourse:a. According to apparent tenor of the   instrumentb. In good faithc. To any person in possession with...
Bank draft: sec; 85Aa. It is an order drawn by an office of a   bank upon another office of the   same bank.b. It is an or...
Upcoming SlideShare
Loading in...5
×

Lesson 1

481

Published on

prithvi

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
481
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
31
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Lesson 1

  1. 1. Negotiable instruments act Tot al sect i ons 147
  2. 2. Introduction• To the whole of India except Jammu and Kashmir• The act deals with only three instruments : – Promissory note – Bill of exchange – And cheque The act does not apply to currency and any local usage documents : such as Hundies If there is no local custom, it applies even to Hundies
  3. 3. What is negotiable instrument• A piece of paper which entitles a person a sum of money.. Which can be transferred to person by mere – Delivery or – Endorsement – And delivery – The person to whom it is transferred will get a better title to it ..
  4. 4. Features of negotiable instrumentA. Consideration A. It is presumed that every instrument is drawn for consideration B. It need not be mentioned in the instrument For example when the cheque is issued only the amount is mentioned and name is mentioned – It need not mention for what purpose it is issued
  5. 5. Features of negotiable instrumentB. transferability:a negotiable instrument can be transferred by.a. Endorsement and deliveryb. If It is an instrument payable to order andc. Mere delivery, if it is a bearer instrumentNegotiable instrument can be transferredunlimited number of times ….
  6. 6. Features of negotiable instrumentC. title:a. The transferee who takes the instrument bonafide, for value and consideration gets good titleb. This title is not affected any defect of title of transferor.c. This is an exception to : “nemo dat quod non habet”
  7. 7. Presumptions- sec: 118a. As to considerationb. As to datec. As to time of acceptance –before maturityd. As to time of transfer – before maturitye. As to the order of endorsementsf. As to the stampg. That the holder is the holder in due courseh. As to dishonour
  8. 8. Promissory note: sec 4a. An instrument in writingb. Contains an unconditional undertakingc. Signed by makerd. To pay certain sum of moneye. Only to the person mentionedf. Or orderg. Or to the bearer of the instrumenth. However as per RBI the word bearer can not be used
  9. 9. Characteristics of PNa. In writingb. Promoise to payc. Unconditionald. Certain sum of moneye. Signed by makerf. Certainty of makerg. Not payable to maker himself
  10. 10. Other important featuresa. Can be made jointlyb. The consideration, place and date of making need not be mentionedc. It may be payable on date or after a periodd. If undated, the date is the date of deliverye. It must be duly stampedf. The ante-dated or post dated is invalidg. It payable in instalments…
  11. 11. Promissory note -formatRs……. Place………. date………..……….month/days after date, I promise topay….or bearer/order the sum of Rs….. Forvalue received with interest @...... P.Awith…..rests. …………….. (maker)
  12. 12. Bill of exchange sec; 5It is an instrument … a. in writing b. containing an unconditional order c. signed by the maker d. directing certain person to pay money e. or order of a certain person or f. to the bearer of the instrument.
  13. 13. Bill of exchange sec; 5Amount Rs….. Place:…….. date: …………….month/days after date, pay to…….or bearer/order the sum of Rupees……..only for value received. To………………. …………….. (drawer) (drawee)
  14. 14. Features of Bill of exchangea. In writingb. Orderc. Unconditional orderd. Money only – certain sume. Acceptancef. Three partiesg. stamping
  15. 15. Cheque: sec:6a cheque is a bill of exchange drawnon 1. a specified banker 2. not expressed to be payableotherwise than on demand 3. and it includes the electronicimage of truncated cheque and also 4. cheque in the electronic form
  16. 16. Cheque: sec:6 date………..Pay…………………………………………………………………….or bearer….Rupees……………….. Amount in figures…………………..........Yeshas bankXXXXXXX signature
  17. 17. Truncated chequeThis means a cheque which istruncated during the course of aclearing cycle..a. Either by the clearing house orb. Bank whether paying or collecting bankc. This is to substitute further physical movement of cheque in writing
  18. 18. Cheque in electronic formThis means a cheque which containsthe exact mirror image of a papercheque, and is generated, written andsigned in secure system ensuring theminimum safety…This contains digital signatureWith or without biometric system
  19. 19. Forms of cheque Order chequeBearer cheque Crossed cheq
  20. 20. Forms of chequeBearer cheque: 1. It is expressed to be payable or the last endorsement is blank… Order cheque: a. which is expressed to be payable to a particular person b. This does not contain any prohibitory orders for transfer
  21. 21. Forms of chequeCrossed cheque:A cheque which is collected onlythrough banker
  22. 22. Marked chequea. A cheque need not be presented for acceptance…b. Always the drawee is liable to the person in whose the cheque is drawnc. When the banker certify the cheque that it is good for payment. That is markingd. However this is not acceptance
  23. 23. Crossed chequea. When cheque bears across its face two transverse parallel lines on top left corner of the cheque. It is a crossed chequeb. Then the cheque is not payable to payee or holder at a bankc. Payment is to be obtained through bankd. It can not be negotiated as open
  24. 24. Crossed cheque
  25. 25. Types of crossingGeneral crossingA cheque contains in addition of lines the wo• “and company” between lines• Or two transverse lines simply• Wither with or without words “not negotia• This should be paid to a banker
  26. 26. Special crossing : sec: 124The two lines contains name of the bankerEither with or without the words “not negotiab SBI ………………………….. Pay………………………………………………………………… ………………………………………………………………… ……………………………………………………………………… ………………………………………….or bearer Rupees……………………………………………………….. ………………………………………………………………….. Yeshas bank XXXXXXXXXX
  27. 27. Note:In general crossing name of thebank is not mentioned whereas inspecial crossing the name of thebank is mentioned and that bankis the collecting banks to whomthe payment has to be made…
  28. 28. Not negotiable crossing: sec: 130a.This is to protect the rights of holder of chequeb.A person taking this kind of cheque can not transfer a better title to the other personc.Even holder in due course can not get better title if the cheque is crossed not negotiabled.However this cheque can be transferred, the only restriction is on title
  29. 29. Account payee crossing orrestrictive crossinga.This contains the words “account payee”b.The amount will be credited to the account of the payeec.However cheque remains negotiable, but generally it hinders the negotiability of the cheque in practice
  30. 30. Who can cross thecheque:a.By the drawerb.After issue: a.The holder b.General one as special one c.Adding the words not negotiable d.The banker may again cross to his agent or collecting banker
  31. 31. Payment of a crossed cheque:sec: 126 to 129a.Banker is not liable if he pays it in due course a cheque: a.Crossed generally, then to any bank b.Crossed specially Or when the payment made in due course
  32. 32. Payment of a crossed cheque:sec: 126 to 129b. If the payment is made out of duecourse, the banks shall be liable to thetrue owner of cheque for any loss….When the cheque is crossed speciallythe banker can refuse the payment
  33. 33. Payment in duecourse:a. According to apparent tenor of the instrumentb. In good faithc. To any person in possession without any suspicion..
  34. 34. Bank draft: sec; 85Aa. It is an order drawn by an office of a bank upon another office of the same bank.b. It is an order drawn by one person upon himselfc. Sec 131 provisions will apply
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×