NEGOTIATION

By Varun M.Rajendran FM-747

 Acc to sec 13(1) A negotiable instrument means a promissory notes, bill of exchange or cheque payable either to order or to bearer

Negotiation
When a note, bill or cheque is transferred to any person, so as to make that person holder of the instrument, the instrument is said to be negotiated.

A negotiable instrument may be transferred from one person to another in either of following ways By negotiation By Assignment

Transfer by Negotiation
Two conditions to be fulfilled : There must be a Transfer of the instrument to another person. Transfer must be made in such a manner as to constitute the transferee the holder of the instrument.

Modes of negotiation
Negotiation by delivery(Sec 47): A negotiable instrument payable to bearer

is negotiable by delivery thereof..

Negotiation by endorsement and delivery(Sec 48): A negotiable instrument, payable to order, is

negotiable by the holder, by endorsement and

delivery thereof.

Importance of delivery in Negotiation

The term 'delivery' is very important in

negotiation Delivery here means actual or constructive

delivery with an intention of transferring property

in the instrument.

If the instrument is executed but is not delivered,

there is no negotiation.

Who may negotiate

Acc to Section 51, Maker Drawee Endorsee

Duration of Negotiability(Sec-60)
A negotiable instrument is negotiable until it has been paid or satisfied on the behalf of the maker, drawee or acceptor at or after maturity. After payment or satisfaction, it cannot be negotiated.