3. Characteristics of Negotiable Instruments
Easily Transferable
Written Documents
duly signed
presumptions
No notice to transfer
Right to Sue
Credit of the party
title free from defects
7. General Cheque Crossing
In general crossing, the cheque bears across its face
which includes the addition of 2 parallel crossing lines
with little spacing between them, within the case of
general crossing on the cheque, the paying banker pays
cash to any banker. For the aim of general crossing 2
crosswise parallel lines at the corner of the cheque are
necessary.
10. Special Cheque Crossing
In this case, the paying banker pays the quantity of
cheque solely to the banker whose name seems within
the crossing or to his assembling agent. The paying
banker can honor the cheque only if it's ordered through
the bank which is mentioned within the crossing.
However, in special crossing 2 parallel crosswise lines
don't seem to be essential however the name of the
banker is most significant.
13. Restrictive Cheque Crossing
The amount mentioned on the cheque is credited only to the payee whose
name is mentioned on the cheque.
This type of crossing restricts the negotiability of the cheque. It directs the
assembling banker to credit the amount of money in a cheque to the account of the
receiver. Where the assembling banker credits the return of a cheque bearing such
crossing to the other account, he shall be guilty of negligence. Also, he won't be
eligible for the protection to the assembling banker below section 131 of the Act.
However, such crossings can don't have any impact on the paying banker. This is
often therefore as a result of it's not his duty to see that the cheque is collected for
the account of the receiver.
15. Not Negotiable Cheque Crossing
A cheque holder which has crossed any single
leaf of cheque either generally or in a special case. In
either case, the words “non-negotiable”.
The Non-Negotiable Crossing doesn't mean that
the cheque is non-transferable. As per the Non-
Negotiable Act, 1881 section 130
17. Types of Cheque Crossing
General Crossing – cheque bears across its face an addition of 2
parallel crosswise lines.
Special Crossing – It bears the crossing across its face in which
the banker’s name is included
Restrictive Crossing – It directs the assembling banker that he
has to credit the number of cheques solely to the account of the
receiver.
Non-Negotiable Crossing – it's once the words ‘Not Negotiable’
are written between the 2 parallel crosswise lines.
19. Endorsement
An endorsement is the process of signing the back of
a paper, thereby imparting the rights that the signer had
in the paper to another person. The number of times an
instrument may be endorsed is unlimited. There is no
requirement that the word "order" be embodied in the
endorsement.
20. Endorsement
The act of a person who is a holder of a negotiable instrument in
signing his or her name on the back of that instrument, thereby
transferring title or ownership is an endorsement. An endorsement
may be in favour of another individual or legal entity. An
endorsement provides a transfer of the property to that other
individual or legal entity. The person to whom the instrument is
endorsed is called the endorsee. The person making the
endorsement is the endorser.
21. Types of Endorsement
1. Blank Endorsement
2. Special Endorsement
3. Restrictive Endorsement
4. Partial Endorsement
5. Conditional Endorsement
23. Blank Endorsement
An endorsement is blank or general where the
endorser signs his name only, and it becomes
payable to bearer. Thus, where a bill is payable to
“Ram or order”, and he writes on its back “Ram”, it is
an endorsement in blank by Ram and the property in
the bill can pass by a mere presentation.
26. Special or Full Endorsement
An endorsement “in full” or a special endorsement is
one where the endorser puts his signature on the
instrument as well as writes the name of a person to
whom order the payment is to be made.
29. Restrictive Endorsement
An endorsement is restrictive which restricts the
further negotiation of an instrument.
Example of restrictive endorsement: “Pay to
Mrs. Geeta only” or “Pay to Mrs Geeta for my use” or
“Pay to Mrs Geeta on account of Reeta” or “Pay to
Mrs. Geeta or order for collection”.
32. Partial Endorsement
An endorsement partial is one which allows
transferring to the endorsee a part only of the
amount payable on the instrument. This does not
operate as a negotiation of the instrument.
33. Partial Endorsement
Example: Mr. Mohan holds a bill for Rs. 5,000 and
endorses it as “Pay Sohan or order Rs. 2500”. The
endorsement is partial and invalid.
35. Conditional or Qualified Endorsement
Where the endorser puts his signature under such
writing which makes the transfer of title subject to
fulfilment of some conditions of the happening of
some events, it is a conditional endorsement.
36. Conditional or Qualified Endorsement
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37. Types of Endorsement
Blank Endorsement – Where the endorser signs his name only,
and it becomes payable to bearer.
Special Endorsement – Where the endorser puts his sign and
writes the name of the person who will receive the payment.
Restrictive Endorsement – Which restricts further negotiation.
Partial Endorsement – Which allows transferring to the
endorsee a part only of the amount payable on the instrument.
Conditional Endorsement – Where the fulfilment of some
conditions is required.
41. What is Material alteration?
The term ‘material alteration‘ indicates alteration or
change in the material parts of the instrument. It may be
defined as any change, which alters the very nature of the
instrument. Thus, it is the alteration, which changes and
destroys the legal identity of the original instrument and
causes it to speak a different language in legal effect from that
which it originally spoke.
43. What constitutes a Material Alteration?
Every alteration or change on a negotiable instrument cannot be
established as material alteration and would not necessarily vitiate the
instrument or affect the rights and obligations of the parties thereto.
The Negotiable Instruments Act is silent on the subject as to what
constitutes a material alteration. Courts of Law in India in this regard
have followed the English Common Law, which held that anything, which
has the effect of altering the legal relations between the parties, the
character of the instrument, or the sum payable, amounts to a material
alteration.
45. Material Alteration
The following are considered as material alteration.
1. Alteration of the date of the instrument
2. Alteration of the amount payable
3. Alteration in time of payment
4. Alteration of the place of payment
5. Alteration of rate of interest or any change of party thereto, if any
6. Tearing of the material part of the instrument
7. Where a bill is accepted generally, the insertion of a place of payment
8. Addition of a new party to the instrument
9. Addition of words to a bill of exchange endorsed in blank so as to convert the same into special
endorsement.
46. Meaning of Material alteration: – Material
alteration means to make any change or alter some
material parts of the instrument and try to make it a valid
created with the purpose of the nature of that
instrument. Any alteration in the original state of a
cheque such as date, amount, payee’s name, changing the
word ‘order’ to bearer appearing after payee’s name or in
endorsement is called material alteration.