The document discusses negotiation and discharge of negotiable instruments. It defines negotiation as the transfer of an instrument like a promissory note, bill of exchange, or cheque to another person, making them the holder. Negotiation can occur through delivery or endorsement and delivery. Endorsement involves the maker or holder signing on the back or face of the instrument to negotiate it. The endorsee is the person the instrument is endorsed to. Endorsement transfers property in the instrument to the endorsee. The document outlines various types of endorsements and effects, who can endorse, discharge from liability, and material alterations.

2. Negotiation

3. “When a promissory note, bill of
exchange or cheque is transferred
to any person, so as to continue
that person the holder thereof,
the instrument is said to be
negotiated.”

4. Takes Place in 2
Ways:
i. By Delivery
ii. By Endorsement and
Delivery

5. Endorsement
Section 15 defines:-
“when the maker or holder of a
negotiable instrument signs the same,
otherwise than as such maker, for the
purpose of negotiation, on the back or face
there of or on a slip of paper annexed there
to , or so signs for the same purpose a
stamped paper intended to be completed as
a negotiation instrument, he is said to
endorse the same, and is called an
“endorser”. the person to whom the
instrument is endorsed is called the
“endorsee”.”

6. Essentials
i. The holder writes and/or signs
on the face or back or on a
separate paper or stamp paper.
ii. The instrument is delivered to
the endorsee.
iii.The instrument is endorsed and
delivered to the endorsee.
iv.Endorsement must be genuine
and not forged.

7. Who may endorse ?
i. The holder of the instrument
ii. The maker signing it
otherwise than as such
maker.
iii. Every maker, drawer or
endorsee
iv. The payee of an instrument

8. Effect
On endorsement, the
endorsee acquires the
property therein of the
negotiable instrument. The
endorsee gets the right to
further negotiation unless
specifically excluded or
restricted.

9. Kinds of Endorsement
i. Endorsement in blank
ii. Endorsement in full
iii. Restrictive Endorsement
iv. Partial Emdorsement
v. Conditional Endorsement
vi. Endorsement Sans Resource
vii.Facultative Endorsement

10. Negotiation Back is when
the transferor again becomes the
holder. In case of dishonor only
parties prior to his first position
are liable. This is to avoid
circuit of action.

11. Discharge from Liability

12. Definition
Whenever a valid negotiable
instrument is created, the parties are liable
to pay the amount due on the instrument.
So long as the instrument is there , there
are certain rights of actions available.
However, when this rights come to end,
the instrument is discharged and is not
negotiable. Thus termination of liability of
the parties is called ‘discharge from
liability’.

13. two meanings
1.Discharge of negotiable
instruments
2.Discharge of party or
parties

14. 1.By cancellation
2.By discharge as a simple contract
3.By renunciation
4.By payment in due course
5.By the party primarily liable becoming
the holder

15. Modes of Discharge of a Party or
Parties
By Qualified acceptance
By payment
By release
By allowing drawee more than 48
hours for deliberation
By non-presentment of cheque

16. Modes of Discharge of a Party or
Parties
By acceptor becoming a holder
Alteration not apparent
Material alteration
By payment of cheque
By cancellation
By operation of law

17. Modes of Discharge of
a Party or Parties
(QP RAN HAM PCO)

18. Material
Alteration
Its an alteration which affects the
rights and liabilities of parties. The
instrument becomes void against
those parties who are liable prior to
alteration. Material alteration does
not affect the liabilities of
persons, who become liable after the
alteration.

20. By:-
Priya Bute
Sheetal Kambli
Pranali Chandivade
Varsha Sawant
Prachi Pawle
Lavina Sandor