it is amy presentation on promissory notes keeping in view negotiable instrument ac 1881 india, pakistan

3. Promissory NotesPromissory Notes

4. Presentation ByPresentation By
NASIR MUHAMMAD (BP10-38) group leaderNASIR MUHAMMAD (BP10-38) group leader
MUHAMMAD ISRAR (BP10-14)MUHAMMAD ISRAR (BP10-14)
ASIF IQBAL (BP10-16)ASIF IQBAL (BP10-16)
MUNEEB AHMAD (BP10-07)MUNEEB AHMAD (BP10-07)
AKHTER MUNIR (BP10-44)AKHTER MUNIR (BP10-44)
THASBEEH ULLAH (BP10-85)THASBEEH ULLAH (BP10-85)

5. ContentsContents
 NEGOTIABLE INSTRUMENT ACTNEGOTIABLE INSTRUMENT ACT
18811881
 Promissory NotesPromissory Notes
 EssentialsEssentials
 PartiesParties
 TypesTypes
 Structure and contentStructure and content
 Holder and Holder in due courseHolder and Holder in due course
 NegotiationNegotiation

6. The Negotiable instruments Act, 1881The Negotiable instruments Act, 1881
 Definition:Definition:
Section 13 of the Negotiable Instrument Act, 1881, defines aSection 13 of the Negotiable Instrument Act, 1881, defines a
negotiable instrument as: “A negotiable instrument means anegotiable instrument as: “A negotiable instrument means a
promissory note, bill of exchange or cheque payable either topromissory note, bill of exchange or cheque payable either to
order or to bearer.”order or to bearer.”
 Negotiable instrument means transferable document.Negotiable instrument means transferable document.
 Explanation:Explanation:
 The Act shows types of instruments, viz.,The Act shows types of instruments, viz., PromissoryPromissory
Notes, Bills of Exchange and Cheques.Notes, Bills of Exchange and Cheques.
 A negotiable instrument is one which entitles the holder toA negotiable instrument is one which entitles the holder to
the receipt of money.the receipt of money.
 right to transfer the same by mere delivery or endorsement .right to transfer the same by mere delivery or endorsement .
 The negotiability of the instrument continues till its maturity.The negotiability of the instrument continues till its maturity.

7. Promissory Notes (Section 4)Promissory Notes (Section 4)
 Definition:Definition:
 Section 4 defines a promissory notes as under: “ASection 4 defines a promissory notes as under: “A
‘promissory note’ is an instrument in writing (not‘promissory note’ is an instrument in writing (not
being a bank-note or a currency-note), containing anbeing a bank-note or a currency-note), containing an
unconditional undertaking, signed by the maker, tounconditional undertaking, signed by the maker, to
pay a certain sum of money only to, or to the order of apay a certain sum of money only to, or to the order of a
certain person, or to the bearer of the instrument.”certain person, or to the bearer of the instrument.”

8. Essentials of Promissory notesEssentials of Promissory notes
 It must be in writing.It must be in writing.
 Contains a promise to pay.Contains a promise to pay.
 Signed by the Maker.Signed by the Maker.
 definite and Unconditional Promisedefinite and Unconditional Promise
 Promise to Pay Money OnlyPromise to Pay Money Only
 Payee must be CertainPayee must be Certain
 Sum Payable must be CertainSum Payable must be Certain
 Payable on Demand or After a Definite Period ofPayable on Demand or After a Definite Period of
TimeTime

9. Parties to a promissory notesParties to a promissory notes
 MAKERMAKER :: The person who makes the promissory note and promises toThe person who makes the promissory note and promises to
pay is called the Maker.pay is called the Maker.
 PAYEEPAYEE:: The person to whom the payment is to be made is called theThe person to whom the payment is to be made is called the
Payee.Payee.
 HOLDERHOLDER: The holder is either the payee or someone to whom he may: The holder is either the payee or someone to whom he may
have indorsed (transfer) the note is known as Holder.have indorsed (transfer) the note is known as Holder.
 ENDORSERENDORSER: The person who indorses the note to another is called the: The person who indorses the note to another is called the
Endorser .Endorser .
 ENDORSEEENDORSEE: The person to whose favor the note is endorsed is called: The person to whose favor the note is endorsed is called
the Endorseethe Endorsee

10. Types of promissory notesTypes of promissory notes
 4 Types of Promissory Notes4 Types of Promissory Notes
 Promissory notes payable on demand;Promissory notes payable on demand;
 Promissory notes payable after date;Promissory notes payable after date;
 Joint promissory notesJoint promissory notes
 Joint and several promissory notesJoint and several promissory notes

11. Structure and content of promissoryStructure and content of promissory
notenote

12. Holder and Holder in due courseHolder and Holder in due course
 Holder:
any person entitled in his own name to the possession thereof and to
receive or recover the amount due thereon from the parties there
to.----Sec.8
 In order to be called as a ‘holder’ a person must satisfy the
following two conditions:
 He must be entitled to the possession of the instrument in his own
name.
 He must be entitled to receive or recover the amount due thereon
from the parties liable thereto.

13. Contt…Contt…
 Holder in due course
The holder of a negotiable instrument is called the holder in due course
if he satisfies the following conditions.----Sec 9
1. He must be a holder.
2. He obtained the instrument for valuable consideration i.e. lawful
consideration
3. He became holder of the instrument before its maturity, i.e. before
the amount mentioned in it became payable.
4. He had no cause to believe that any defect existed in the title of the
person from whom he derived his title
e.g. A post dated cheque does not indicate any defective title and
therefore the transferee of such a cheque may be a holder in due
course if the other conditions are satisfied.

14. Negotiation of Promissory NotesNegotiation of Promissory Notes
Definition:Definition:
Negotiation of an instrument is the process by which the ownershipNegotiation of an instrument is the process by which the ownership
of the instrument is transferred from one person to another.of the instrument is transferred from one person to another.
 Transfer with an intention to transfer the title of the instrument.Transfer with an intention to transfer the title of the instrument.
 Negotiation by delivery (Sec. 47):Negotiation by delivery (Sec. 47):
Where a promissory note or a bill of exchange or a cheque is payableWhere a promissory note or a bill of exchange or a cheque is payable
to a bearer, it may be negotiated by delivery thereof. Example: A the holderto a bearer, it may be negotiated by delivery thereof. Example: A the holder
of a negotiable instrument payable to bearer, delivers it to B’s agent to keepof a negotiable instrument payable to bearer, delivers it to B’s agent to keep
it for B. The instrument has been negotiated.it for B. The instrument has been negotiated.
 Negotiation by endorsement and delivery (Sec. 48):Negotiation by endorsement and delivery (Sec. 48):
A promissory note, a cheque or a bill of exchange payable to orderA promissory note, a cheque or a bill of exchange payable to order
can be negotiated only be endorsement and delivery. Unless the holdercan be negotiated only be endorsement and delivery. Unless the holder
signs his endorsement on the instrument and delivers it, the transferee doessigns his endorsement on the instrument and delivers it, the transferee does
not become a holder. If there are more payees than one, all must endorse itnot become a holder. If there are more payees than one, all must endorse it

15.  Who may negotiate?Who may negotiate?
The sole maker, drawer, payee or endorsee and all of them jointlyThe sole maker, drawer, payee or endorsee and all of them jointly
can negotiate an instrument, provided its negotiability has not beencan negotiate an instrument, provided its negotiability has not been
restricted or excluded by a term used in the instrumentrestricted or excluded by a term used in the instrument.------Sec..------Sec.
51.51.