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W h a t is N e g o t ia b le
          In s t r u m e n t s ?
 The term negotiable instruments means a written document
  which entitles a person to a sum of money.

 A negotiable instruments is transferable by delivery or by
  endorsement and delivery.

 The transfer entitles a person to the sum of money mentioned
  therein.

 “Thus the negotiable instrument is a document which is
  legally recognized by custom of trade or law, transferable by
  delivery or by endorsement and delivery.”
Characteristics Of a Negotiable Instrument
 Freely transferable: The property in a negotiable instrument passes from one
  person to another by a simple process, i.e., by mere delivery if it is payable to
  bearer, and by endorsement and delivery if it is payable to order.

 Holder’s title free from all defects: The holder in due course (one who
  acquires the instrument in good faith and for consideration) gets it free from all
  defects.

 Recovery: One can sue upon the instrument in his own name.

 Payable to order or bearer: - It must be payable either to order or bearer

 Presumption as to Holder:- Every holder of negotiable instrument is presumed
  to be holder in due course.

 Presumption as to considerations:- Every negotiable instrument is presumed to
  have been made, drawn, accepted, endorsed , negotiated or transferred for
  consideration.
Types of Negotiable Instruments


 Promissory note.

 Bill of exchange.

 Cheque.
Promissory note.



      A promissory note is an instrument in
      writing containing an unconditional
      undertaking signed by the maker to
      pay a certain sum of money only to or
      to the order of a certain person or to
      the bearer of the instrument.
Parties

 MAKER : The person who makes the promissory note and promises to
  pay is called the Maker.

 PAYEE: The person to whom the payment is to be made is called the
  Payee.

 HOLDER: The holder is either the payee or someone to whom he may
  have indorsed (transfer) the note is known as Holder.

 ENDORSER: The person who indorses the note to another is called the
  Endorser .

 ENDORSEE: The person to whose favor the note is endorsed is called
  the Endorsee
Essentials Of The Promissory Notes

 It must be in writing.

 It must contain a promise or undertaking to
 pay a definite sum of money.

 The promise to pay must be unconditional.

 It must be signed by the maker.

 The payee must be identified & must be
 certain.

 The sum payable must be certain.
F o r m a t O f P r o m is s o r y
                 N o te


Rs. 10,000/-                   Delhi, February10,2012

Three months after date I promise to pay cyko on
order the sum of ten thousand rupees, for value received.
To,
   Cyko                                        Stamp
   222, Ashok Vihar
                                              Sd/-Ram
   Delhi-110052
Bill Of Exchange
A bill of exchange is an instrument in writing containing an
unconditional order signed by the maker, directing a certain
person to pay a certain sum of money only to, or to the order
of certain person to the bearer of the instrument.
Parties

 DRAWER: The person who makes the bill of exchange is called
  drawer.

 DRAWEE: The person who is directed to pay is called drawee.

 PAYEE: The person to whom the payment is to be made is called
  payee.

 ACCEPTOR: When the drawee accepts the bill is called acceptor.
a c t e r is t ic s o f t h e B ill o f E x c h


   The amount payable must be certain.

   The payment must be made in money.

   The bill payable may be either on demand or after a specified
    period.

   The bill may be payable either to the bearer or to the order of
    payee.
Format Of Bill Of Exchange

Rs. 500                             Greater Noida,21 Feb.2009

Three months after the date pay to Ram or order the sum of Five Hundred
  rupees , for value received.
To,
   Cyko
   235,Subhash marg
   delhi-110006.
                                                                Stamp
   In case of need with      Accepted
                                                              Krishna
   Canara Bank, Delhi          Cyko       Sd/-
Cheque
A cheque is a bill of exchange drawn on a specified banker
and expressed to be payable otherwise than on demand.

The maker of a bill of exchange or Cheque is called the
“Drawer"; the person thereby directed to pay is called the
"Drawee".
Parties
 DRAWER: The person who makes a cheque is called
  Drawer.

 DRAWEE: The person who is directed to pay is called
  Drawee.

 PAYEE: The person to whom the payment is to be made.
e n t ia l c h a r a c t e r is t ic s o f a C h

     In writing

     Express order to pay

     Definite and unconditional order

     Signed by drawer

     Order to pay certain amount

     Payable on demand
Forma t O f C he que

No.……..
  Date………..2010



     Pay…………………………………………………………or bearer
 the sum of Rs…………………………………

 Rs…………………
    A/c No          LF No       Sd/-
PUNJAB NATIONAL BANK
Subzi Mandi,Delhi -110007

         “5777100” 111013035”
C r o s s in g o f C h e q u e
A cheque is said to be crossed when it bears across its face
two parallel transverse lines which are usually drawn on
the left hand top corner of the Cheque.

Legally there are two kinds of crossing.

General crossing: The drawing up of two parallel lines
on the face of the check at the top left hand corner with or
without the words & Co not negotiable or Account payee
only is known as a General Crossing.

Special crossing: A check is deemed to be crossed
specially when it bears across its face the name of the
banker either with or without the words not negotiable.
Negotiation

An instrument is said to be negotiated:

 When a promissory note, BOE, cheque is transferred to any
  person so as to constitute that person the holder of the
  instrument


Transfer with an intention to transfer the title of the instrument.

        Negotiation by delivery
        Negotiation by endorsement and delivery
Presentment

Presentment for Acceptance (required only in
 case of BOE)

Presentment for payment

Presentment made to the drawee.

Must be made before the date of maturity
Dishonor

A negotiable instrument is said to be dishonored by non-
payment when the maker, acceptor or drawee, as the case
maybe makes default in payment upon being duly required
to pay the same.

    Dishonor by non payment
    Dishonor by non acceptance
THANK YOU

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Negotiable instruments

  • 1.
  • 2. W h a t is N e g o t ia b le In s t r u m e n t s ?  The term negotiable instruments means a written document which entitles a person to a sum of money.  A negotiable instruments is transferable by delivery or by endorsement and delivery.  The transfer entitles a person to the sum of money mentioned therein.  “Thus the negotiable instrument is a document which is legally recognized by custom of trade or law, transferable by delivery or by endorsement and delivery.”
  • 3. Characteristics Of a Negotiable Instrument  Freely transferable: The property in a negotiable instrument passes from one person to another by a simple process, i.e., by mere delivery if it is payable to bearer, and by endorsement and delivery if it is payable to order.  Holder’s title free from all defects: The holder in due course (one who acquires the instrument in good faith and for consideration) gets it free from all defects.  Recovery: One can sue upon the instrument in his own name.  Payable to order or bearer: - It must be payable either to order or bearer  Presumption as to Holder:- Every holder of negotiable instrument is presumed to be holder in due course.  Presumption as to considerations:- Every negotiable instrument is presumed to have been made, drawn, accepted, endorsed , negotiated or transferred for consideration.
  • 4. Types of Negotiable Instruments  Promissory note.  Bill of exchange.  Cheque.
  • 5. Promissory note. A promissory note is an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.
  • 6. Parties  MAKER : The person who makes the promissory note and promises to pay is called the Maker.  PAYEE: The person to whom the payment is to be made is called the Payee.  HOLDER: The holder is either the payee or someone to whom he may have indorsed (transfer) the note is known as Holder.  ENDORSER: The person who indorses the note to another is called the Endorser .  ENDORSEE: The person to whose favor the note is endorsed is called the Endorsee
  • 7. Essentials Of The Promissory Notes  It must be in writing.  It must contain a promise or undertaking to pay a definite sum of money.  The promise to pay must be unconditional.  It must be signed by the maker.  The payee must be identified & must be certain.  The sum payable must be certain.
  • 8. F o r m a t O f P r o m is s o r y N o te Rs. 10,000/- Delhi, February10,2012 Three months after date I promise to pay cyko on order the sum of ten thousand rupees, for value received. To, Cyko Stamp 222, Ashok Vihar Sd/-Ram Delhi-110052
  • 9. Bill Of Exchange A bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of certain person to the bearer of the instrument.
  • 10. Parties  DRAWER: The person who makes the bill of exchange is called drawer.  DRAWEE: The person who is directed to pay is called drawee.  PAYEE: The person to whom the payment is to be made is called payee.  ACCEPTOR: When the drawee accepts the bill is called acceptor.
  • 11. a c t e r is t ic s o f t h e B ill o f E x c h  The amount payable must be certain.  The payment must be made in money.  The bill payable may be either on demand or after a specified period.  The bill may be payable either to the bearer or to the order of payee.
  • 12. Format Of Bill Of Exchange Rs. 500 Greater Noida,21 Feb.2009 Three months after the date pay to Ram or order the sum of Five Hundred rupees , for value received. To, Cyko 235,Subhash marg delhi-110006. Stamp In case of need with Accepted Krishna Canara Bank, Delhi Cyko Sd/-
  • 13. Cheque A cheque is a bill of exchange drawn on a specified banker and expressed to be payable otherwise than on demand. The maker of a bill of exchange or Cheque is called the “Drawer"; the person thereby directed to pay is called the "Drawee".
  • 14. Parties  DRAWER: The person who makes a cheque is called Drawer.  DRAWEE: The person who is directed to pay is called Drawee.  PAYEE: The person to whom the payment is to be made.
  • 15. e n t ia l c h a r a c t e r is t ic s o f a C h  In writing  Express order to pay  Definite and unconditional order  Signed by drawer  Order to pay certain amount  Payable on demand
  • 16. Forma t O f C he que No.…….. Date………..2010 Pay…………………………………………………………or bearer the sum of Rs………………………………… Rs………………… A/c No LF No Sd/- PUNJAB NATIONAL BANK Subzi Mandi,Delhi -110007 “5777100” 111013035”
  • 17. C r o s s in g o f C h e q u e A cheque is said to be crossed when it bears across its face two parallel transverse lines which are usually drawn on the left hand top corner of the Cheque. Legally there are two kinds of crossing. General crossing: The drawing up of two parallel lines on the face of the check at the top left hand corner with or without the words & Co not negotiable or Account payee only is known as a General Crossing. Special crossing: A check is deemed to be crossed specially when it bears across its face the name of the banker either with or without the words not negotiable.
  • 18. Negotiation An instrument is said to be negotiated:  When a promissory note, BOE, cheque is transferred to any person so as to constitute that person the holder of the instrument Transfer with an intention to transfer the title of the instrument.  Negotiation by delivery  Negotiation by endorsement and delivery
  • 19. Presentment Presentment for Acceptance (required only in case of BOE) Presentment for payment Presentment made to the drawee. Must be made before the date of maturity
  • 20. Dishonor A negotiable instrument is said to be dishonored by non- payment when the maker, acceptor or drawee, as the case maybe makes default in payment upon being duly required to pay the same.  Dishonor by non payment  Dishonor by non acceptance