What are Negotiable Instruments???

In India Negotiable Instrument Act,1881. It refers to a written document which entitles a person to a sum of money. Transferable by delivery or by delivery and endorsement. Promissory Notes, bills of exchange, cheques and hundies. What is Negotiation?

Characteristics of negotiable instruments

Free transferability

Statute Usage

Multiple transfer till Maturity Bearer = Owner Title free from Defects Can Sue in his own name

Kinds of Negotiable Instruments

Bearer Instrument: A cheque Payable to bearer Order Instrument A bill payable to the order of Mr. Prashant Rathor Inland Instrument: A writes a promissory note in India in favour of B a resident of India, which is payable in India. Foreign Instrument: A writes a promissory note in India in favour of B of London, which is payable in London.

Kinds of Negotiable Instruments

Ambiguous Instrument A draws a bill on B. The bill is endorsed to C.B. is a fictitious person. Although it is a bill but C can treat it as a note because B is a fictitious person, As such A is liable to pay money to C. Inchoate Instrument A signed as maker a blank stamped paper and gave it to B and authorized him to fill it as a note for Rs. 500 to secure an advance which C was to make to B. B fraudulently filled it up as a note for Rs. 2,000 payable to C, who is entitled to Rs. 2,000 from A. Demand Instrument Immediate-A cheque is always payable on demand. At a future date- Bill payable 60 days after 1st May,2012

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