1. Promissory Note A negotiable promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at fixed or determinable time a sum certain in money to order or to bearer. 2. Bill of Exchange A bill of exchange is an unconditional order in writing addressed by one person to another signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. 3. Check A check is a bill of exchange drawn on a bank payable on demand. . Order Instrument !nstrument payable to a "named person or his order# or "to the order of a named person# $. Bearer Instrument !nstrument payable to bearer or to fictitious or impersonal payee or bearer or to an estate, or to cash, or when the only or last indorsement is an indorsement in blank. %. Real Defense Are defenses attached to the instrument itself and can be set up against the whole world, including the holder in due course. !t is a defense against everybody because the right to be enforced has never existed, or ceased to exist. &he !nstrument cannot be enforced against a person to whom real defenses are available. '. Personal Defense &hese are personal to the person or subsequent holder against whom the instrument is being enforced.

1hen you pay a cheque into your account it has to be sent to the drawer2s for payment for the bank to decide if it will honour the cheque. but not available against the holder in due course. !t must contain unconditional promise or order to pay a sum certain in money 3. 74-+&!A8!9!&: +. ! "older In Due Course A holder in due course is a holder who has taken the instrument under the following conditions ( ) *e took the instrument complete and regular upon its face.alue ! / &hat at the time it was negotiated to him. .or . the effect of acceptance is retroactive from date of presentation. and if no answer is given to treat the bill as accepted. A7 !76&30. ) *e took it in -ood . ' & Day Rule !s the number of days which the bank clears the check. RE()TION*"IP 3450!6!&46 +. *owever. the drawee is not bound to accept immediately. #! $% & "our Rule !f a bill is presented to the drawee for acceptance. .aith and . he had no notice of any !nfirmity in the instrument or defect in the title of the person negotiating it. and without notice that it had been previously dishonored. + ) *e becomes the holder before it was overdue. 2. *e is allowed 2 /hours after delivery to ascertain the state of accounts between himself and the drawer. the holder has no right to demand an answer. it such was the fact. 0ntil the time expires. if the acceptance is given.47& 1.&hese defenses grow out of the agreement or conduct of a particular person which renders it inequitable for him to enforce it against the party sought to be made liable. !t must be payable on demand or at a fixed or determinable future time. !t must be in writing and signed by the maker or drawer.

>9:A 6!. 89A7< 2. 50A9!. !7=+364.+3 . 1here the instrument is addressed to a drawee he must be named or otherwise indicated therein with reasonable certainty.47& 1.!4= or b. As to presence or absence of limitations a. &he certifier of a check 2. As to scope of liability of indorser a. &he other kinds of !ndorsements a. 0750A9!. or the bearer the thereof. As to the kind of title transferred a.A9+06 d. >3!.. As to method of negotiation a. !t must be payable to order or bearer $.4 3. &he maker of a promissory note b. 64(+7=A3: B(+7=!&!+7A99:C 9!A894D a. &he acceptor of a bill of exchange c.!4= or -4743A9 . 07(+7=!&!+7A9 $. *+9=436 !7 =04 (+0364 A >ayee or indorsee who is in possession of the instrument. <!7=6 +. !334-09A3 or A7+.A904 !s one who has given a valuable consideration for the instrument issued or negotiated to him.4 <!7=6 +. *+9=436 .>94 *+9=43 A person who qualifies as a holder but does not meet all the conditions to qualify as a holder in due course. 7+7 ) 346&3!(&!. >A3&!46 9!A894 +7 74-+&!A894 !76&30. &he drawer of a bill and .4? or b. @+!7& b.A(09&A&!. *+9=436 *+9=436 6!.47& 1. 6>4(!A9 b. 346&3!(&!. 60((466!. (+7=!&!+7A9 b. .A3: 9!A894 a.4 c.

47& 1. 7otice of dishonor F. >resentment for payment '. &he =rawee until he accepts the instrument in which case he becomes an acceptor. &he endorser of a note or a bill 3.4 +. =ischarge . A 74-+&!A894 !76&30. 7+& 9!A894 a. Acceptance $. =ishonor by non/payment E. 6&4>6 !7 &*4 9!. 7egotiation 3.b. =ishonor by non/acceptance %. >rostest in some casese 1G. >resentment for Acceptance in certain kinds of bills of 4xchange . !ssuance 2.