Negotiable Instruments Act 1980


Promisory Note 

A Promisory note is an instrument in writing Not a bank note or currency note Contains an unconditional undertaking Signed by the maker To pay a certain sum of money Eg I promise to pay B or order Rs. 500 Not a promisory note eg..Mr. B , I OU Rs 1000/I promise to pay B Rs 500/- and all other sums which shall be due to him.

Bills 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 a certain person or to the bearer of the instrument  Three parties are necessary to a bill of exchange ± The Drawer, The Drawee , and Payee.

Bill of exchange 

cheque is a bill of exchange drawn on a specified banker  A cheque is not a legal tender but only a means of payment  A cheque is always drawn on a specified banker , while a bill of exchange may be drawn on any one including a banker

Negotiable instrument   

A negotiable instrument means a promissory note, bill of exchange or cheque either to order or to bearer. Holder ± The holder of a promisory note, bill of exchange or cheque means any person entited in his own name to the possession thereof and to receive or recover the amount due thereon from the parties Holder in due course ± the possessor of promisory note, box, or cheque ± before it became payable

Dishonour and Discharge
by non acceptance ± when the drawee makes default in acceptance upon being duly required to accept the bill or where presented is excused and the bill is not accepted  Dishonour by non payment ± When tehmaker of the note aceptor of the bill or drawee of the cheque makes default upon being duly required to pay 


cancellation ± to a holder who cancels such acceptors or indorsers name with the intect to discharge him to all parties claiming under such holder  By release ±  BY payment


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