The document discusses the Law of Negotiable Instruments as defined by the Negotiable Instruments Act of 1881, which outlines promissory notes, bills of exchange, and cheques. It highlights the characteristics of negotiable instruments, such as their transferability and the rights of a holder in due course, who can recover amounts without defects from transferors. Key principles, presumptions, and exceptions to general transfer laws are also examined.

1. Law of Negotiable
Instruments
Preeti Kana Sikder
Assistant Professor
Jahangirnagar University

2. The Negotiable
Instruments Act, 1881
An Act to define and amend the law relating to
Promissory Notes, Bills of Exchange and
Cheques.

3. Negotiable
‘transferrable from one person to another in return for
consideration (something that has value in the eyes of law)’

4. Instrument
‘written document by which a right is created in favour of
some person’

5. Negotiable Instrument
A document which entitles a person to a sum of money
and which is transferrable from one person to another by
mere delivery (transfer of possession/indorsement)

6. What are Negotiable Instruments?
Section 13 of the Negotiable Instruments Act, 1881
(1)A “negotiable instrument” means a promissory note, bill
of exchange or cheque/check payable either to order or to
bearer.
(2) A negotiable instrument may be made payable to two or
more payees jointly or it may be made payable in the
alternative to one of two, or one or some of several payees.

7. Characteristics of Negotiable
Instruments
• These instruments pass from one person to another freely.
• A holder in due course will get the instrument free from
all defects in the title of the transferor.
• The holder in due course can sue upon a negotiable
instrument in his own name for the recovery of the
amount.

8. Holder in Due Course (Sections 9, 53 & 53A)
• General principle is a person cannot give better title than he has.
Therefore if anyone gets any property by way of any offence, the
transferee also does not get better title than the transferor.
• Negotiable instrument is an exception to this principle. For instance, if
X obtains a bearer cheque by fraud from A, X has no right to claim
money under this cheque. X transfers it to Y who receives it for value
and has no knowledge of this fraud. Y can claim money from the
bank. If bank refuses to pay, Y can go to court against A and/or the
bank.
• The remedy for A or the bank and/or is that they can go to court
against X because Y is a holder in due course.

9. Characteristics of Negotiable
Instruments
• Presumptions under Sections 118 and 119:
• Every Negotiable Instrument is presumed to have been activated
upon full consideration.
• When a bill of exchange is accepted, it is presumed that is was
accepted within a reasonable time and before its maturity.
• Every transfer of a Negotiable Instrument is presumed to have been
made before its maturity.
• The indorsements appearing upon a Negotiable Instrument are
presumed to have been made in the order in which they appear
thereon.

10. Sections 13, 9, 53 and 53A
Post-lecture Activity

11. Thank You