(1) Money can very easily and safely be transferred from one place to another with the help of

negotiable i.e., cheque etc. The holder of these negotiable/ instruments can transfer these
instruments merely by delivery and in some cases by delivery and endorsement.

The holder of a negotiable instrument can enforce his claim very quickly and with much less
effort in a court in comparison to his claim of credit given without a negotiable instrument as
there are number of presumptions in case of a negotiable instrument.

The law relating to negotiable instruments is given in the Negotiable Instruments Act, 1881. The
Act is applicable to the whole of India including the State of Jammu and Kashmir. The
Negotiable Instruments Act, 1881, specially deals with Promissory Notes, Bills of Exchange and
Cheques, but does not exclude other instruments if they satisfy the conditions of negotiability by
usage or custom of the trade. For instance. Hundi is the most important single example, beside
Share Warrant, Port Trust Debentures, etc.

ADVERTISEMENTS:

The Reserve Bank of India Act, 1934 :

The Negotiable Instrument Act, 1881 does not affect the provisions of the Reserve Bank of India
Act, 1934, which has an over-riding effect. The Central Government and the Reserve Bank of
India have been given the monopoly rights of issuing notes (currency notes) in India.

Sec. 31 of the Reserve Bank of India Act. 1934 provides that no person in India other than the
Reserve Bank of India or the Central Government can draw, accept, make or issue any bill of
exchange, hundi, promissory note or engagement for the payment of money payable to bearer on
demand.

It further provides that no person other than the Reserve Bank, or the Central Government, can
make or issue a promissory note expressed to be payable to the bearer of the instrument, whether
payable on demand or after a certain period of time.

ADVERTISEMENTS:

Penalty:

Sec. 32 provides penalty for violating the provisions of Sec. 31. If any person makes or issues
such instruments, then he shall be punishable with fine which may extend to the amount of the
bill, note etc. Further, such bill will be illegal and unenfor

2) A negotiable instrument has the following characteristics.

1. Property

The possessor of the negotiable instrument is presumed to be the owner of the property contained
therein. A negotiable instrument does not merely give possession of the instrument but right to
property also. The property in a negotiable instrument can be transferred without any formality.
In the case of a bearer instrument, the property passed by mere delivery to the transferee. In the
case of an order instrument, endorsement and delivery are required for the transfer of property.

2. Title

The transferee of a negotiable instrument is known as holder in due course.’ A bonafide

transferee for value is not affected by any defect of title on the part of the transferor or of any of
the previous holders of the instrument. This is the main distinction between a negotiable
instrument and other subjects of ordinary transfer. The general rule of nemo dat quod non habet
does not apply to negotiable instruments.

3. Rights

ADVERTISEMENTS:

The transferee of the negotiable instrument can sue in his own name, in case of dishonor.

A negotiable instrument can be transferred any number of times till it is at maturity. The holder
of the instrument need not give notice of transfer to the party liable on the instrument to pay.

4. Presumptions

Certain presumptions apply to all negotiable instruments e.g. a presumption that consideration
has been paid under it.

5. Prompt Payment

A negotiable instrument enables the holder to expect prompt payment because a dishonor means
the ruin of the credit of all persons who are parties to the instrument.

Examples of negotiable instruments

(a) Negotiable instruments recognized by statute:

ADVERTISEMENTS:

i) Bills of exchange

ii) Promissory notes.

iii) Cheques.

ADVERTISEMENTS:

(b) Negotiable instruments recognized by usage or custom:

i) Hundis.

ii) Share warrants.

iii) Dividend warrants.

ADVERTISEMENTS:

iv) Banker’s drafts.

v) Circular notes.

vi) Bearer debentures.

vii) Debentures of Bombay port trust.

ADVERTISEMENTS:

viii) Railway receipts.

ix) Delivery orders.

The list of negotiable instruments is not a closed chapter. With the growth of commerce, new
kinds of securities may claim recognition as negotiable instruments.

Example of Non-negotiable instruments

i) Money orders.

ii) Deposit receipts.

iii) Share certificates

iv) Dock warrants.

v) Postal orders.

1. (3) 1. Negotiable Instrument 1

2. 2. Learning Objectives • Introduction • Meaning of Negotiable Instruments •
Characteristics of a negotiable instrument • Presumptions as to negotiable instrument •
Types of negotiable Instrument • Promissory notes • Bill of exchange • Cheques • Hundis
• Parties to negotiable instruments • Parties to Bill of Exchange • Parties to a Promissory
Note • Parties to a Cheque 2
3. 3. Introduction The Negotiable Instruments Act was enacted, in India, in 1881. Prior to its
enactment, the provision of the English Negotiable Instrument Act were applicable in
India, and the present Act is also based on the English Act with certain modifications. It
 extends to the whole of India except the State of Jammu and Kashmir. The Act operates
subject to the provisions of Sections 31 and 32 of the Reserve Bank of India Act, 1934.
Section 31 of the Reserve Bank of India Act provides that no person in India other than
the Bank or as expressly authorised by this Act, the Central Government shall draw,
accept, make or issue any bill of exchange, hundi, promissory note or engagement for the
payment of money payable to bearer on demand. No one except the RBI or the Central
Government can make or issue a promissory note expressed to be payable on demand or
after a certain time. Section 32 of the Reserve Bank of India Act makes issue of such bills
or notes punishable with fine which may extend to the amount of the instrument. 3
4. 4. The effect or the consequences of these provisions are: • Section 32 RBI A promissory
note • It cannot be made payable to the bearer , no matter whether it is payable on
demand or after a certain time. A bills of exchange • It cannot be made payable to the
bearer on demand though it can be made payable to the bearer after a certain time. A
cheque • payable to bearer or demand can be drawn on a person’s account with a banker
4
5. 5. Meaning Negotiable instruments are essentially credit instrument with features of
negotiability. Credit is the privilege to “buy now pay later”. Instruments which evidence
or acknowledge such as credits are called Credit Instruments. Instrument is “ a legally
recognised written document, where by, rights are created in favour of one and
obligations are created on the part of another.” Negotiable means transferable from one
person to another either by mere delivery or by endorsement and delivery , to enable the
transferee to get a title in the instrument. Negotiable instruments are the most common
credit instruments used in businesses. They are basically written promises or orders to
pay money and may be transferred from person to person. 5
6. 6. Definition • The term ‘negotiable’ means transferable and the word ‘document’ means
‘in writing’. Therefore, negotiable means a written promise or order to pay money which
may be transferred from one person to another. • A Negotiable Instrument means a
promissory note, bill of exchange or cheque payable either to order or to bearer.
--Negotiable Act,1881 • A negotiable instrument is one , the property in which is
acquired by anyone who takes it bonafide and for value notwithstanding any defects of
the title in the person from whom he took it --Justice Wills • Negotiable instrument
means a written document which creates a right in favour of some person and which is
freely transferable --Anonymous 6
7. 7. Payable to bearer • Payable to bearer means the instrument is payable to any person
whosoever bears/holds it. • For an instrument to be able to pay to whoever holds it, it
must be expressed so on the instrument • A note, bill or cheque is payable to bearer
which is expressed to be so payable or on which the only or last endorsement is an
endorsement in blank 7
8. 8. Payable to order • A promissory note, bill or cheque is payable to order if it is
expressed to be payable to a particular person or his order • But it should not contain any
words prohibiting transfer • Instrument with narrations like these is not treated as payable
as order and therefore such a document shall not be treated as negotiable instrument
because its negotiability has been restricted. 8
9. 9. Essential Features Of Negotiable Instruments Witting and Signature according to the
rules • A Negotiable Instrument must be in writing and signed by the parties according to
the rules relating to (a) promissory notes, (b) Bills of Exchange and (c) Cheques. Payable
 by Money • Negotiable Instruments are payable by the legal tender money of India. •
Liabilities of the parties are governed in terms of such money only. Unconditional
Promise • If the instrument is a promissory note, it must contain an unconditional promise
to pay. • If the instrument is a bill or cheque, it must be an unconditional order to pay
money. Freely transferable • A negotiable instrument is transferable from one person to
another by delivery or by endorsement and delivery Acquisition of Property • Any person
who possesses a negotiable instruments, becomes its owner and entitled to the sum of
money, mentioned on the face of the instrument. • When it is payable to bearer, the
property in its passes from one holder to another by mere delivery. • If it is payable to
order, the property passes by endorsement, i.e. by the signature of its holder on its back
and its delivery. 9
10. 10. Essential Features Of Negotiable Instruments Acquisition of Good Title/ Right of the
Holder in Due Course • The holder in due course, i.e. the transferee of a negotiable
instrument in good faith and for value, acquires a good title to the instrument even if the
title of the transferor is defective. Further his title will not be affected, by any defect in
the title of the transferor. The holder in the due course remains unaffected by certain
defences, which might be available against previous holders, as for example , fraud, to
which he is not a party. No Need of Giving Notice • There is no need of giving a notice
of transfer of a negotiable instrument to the party liable to pay the money. Certain
Presumptions • Unless contrary proved certain presumptions are in the made case of all
negotiable instruments. Consideration, date, signature of holder in due course, for
example, is presumed 10
11. 11. Presumptions as to a Negotiable Instrument Consideration Date Time of acceptance
Time of transfer Order of endorsement Stamp Holder in due course Proof of protest 12
12. 12. Examples of Negotiable Instruments • Bills of exchange • Promissory notes •
Cheques Negotiable instruments recognized by statute • Hundis • Share warrants •
Dividend warrants • Banker’s drafts • Circular notes • Bearer debentures • Debentures of
Bombay port trust • Railway receipts • Delivery orders Negotiable instruments
recognized by usage or custom 13
13. 13. Promissory notes Specimen 14
14. 14. Specimen of Debentures 15
15. 15. Specimen of Railway Receipt 16
16. 16. Specimen of Warrants 17
17. 17. Specimen of Dividend Warrant 18
18. 18. Specimen of Bills of Exchange 19
19. 19. HUNDI SAMPLE 20
20. 20. Specimen of Bank Draft 21
21. 21. Bank Draft Samples 22
22. 22. Specimen of Cheque 23
23. 23. Example of Non-negotiableinstruments Money orders Deposit receipts Share
certificates Dock warrants Postal orders 24
24. 24. Types of Negotiable Instrument Promissory Notes Bill of Exchange Cheques Hundis
27
25. 25. Promissory Notes • “A promissory note is an instrument in writing (note being a
bank-note or a currency note) containing an unconditional undertaking, signed by the
 maker, to pay a certain sum of money to or to the order of a certain person, or to the
bearer of the instruments.” -Section 4 of the NI Act 28
26. 26. Example • Person A sign instrument in following terms: • I promise to pay B on order
Rs 500 • I acknowledge myelf to be indebted to BB in Rs 1000 to be paid on demand for
value received • Mr B IOU Rs 1000 • I promise to pay B Rs 500 and all other sums which
shall be due to him • I promise to pay B Rs 500 first deducting there out any money
which he may owe to me • I promise to pay B Rs 500 seven days after my marriage with
C • I promise to pay B Rs 500 on D’s Death , provided D leaves me enough to pay that
sum 29
27. 27. Signed by Drawer/MakerPayee/ Endorser pay a certain sum of money to the order of
a certain person Instrument in writing 30
28. 28. Essential Characteristics of a Promissory Notes •A mere verbal promise to pay is not
a promissory noteMust be in writing •A mere acknowledgment is not enough Must
certainly an express promise or clear understanding to pay •The promise to pay must not
depend upon the happening of some outside contingency or event Promise to pay must be
unconditional •The person who promise to pay must sign in any part of the instrument
Signed by the maker •The note self must show clearly who is the person agreeing to
undertake the liability to pay the amount Maker must be certain •the person to whom the
promise has been made may be ascertained by name or designation Payee must be certain
•Money means legal tender money and not old and rare coins Promise should be to pay
money and money only •certainty—not only regarding the person to whom or by whom
payment is to be made but also regarding the amount Amount should be certain 31
29. 29. Parties to a Promissory Note • He is the person who promises to pay the amount
stated in the note. • He is the debtor. Maker • He is the person to whom the amount is
payable • He is the creditor. Payee • He is the person (can be the payee ) to whom the
note might have been endorsed. Holder • When the holder of the note transfers or
endorses the instrument to anyone else , the holder becomes endorser Endorser • The
person to whom the it is endorsedEndorsee 32
30. 30. Bill of Exchange • “A bill 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”. •
A bill of exchange, therefore, is a written acknowledgement of the debt, written by the
creditor and accepted by the debtor. There are usually three parties to a bill of exchange
drawer, acceptor or drawee and payee. Drawer himself may be the payee. -Section 5 of
Negotiable Instrument Act 1881 33
31. 31. Essential Conditionsof a Bill of Exchange It must be in writing It must be signed by
the drawer. The drawer, drawee and payee must be certain. The sum payable must also be
certain. It should be properly stamped. It must contain an express order to pay money and
money alone. The order must be unconditional. 34
32. 32. Example • “I shall be highly obliged if you make it convenient to pay Rs. 1000 to
Suresh”. • “Mr. Ramesh, please let the bearer have one thousand rupees, and place it to
my account and oblige” There is no order to pay, but only a request to pay. Therefore,
none can be considered as a bill of exchange: • “Please pay Rs. 500 to the order of ‘A’. •
‘Mr. A will oblige Mr. C, by paying to the order of’ P”. There is an order to pay, though
it is politely made. Therefore, they can be considered as a bill of exchange: 35
33. 33. Parties to a Bills of Exchange •The maker (creditor) of a bill of exchangeDrawer •The
person (debtor) directed to pay the money by the drawer (creditor)Drawee •After a
drawee (debtor) of a bill has signed his assent upon the bill, if holder or some other
person sign on his behalf Acceptor •The person named in the instrument, to whom or to
whose order the money is directed to be paid by the instrument Payee •When the holder
transfers or indorses the instrument to anyone else, the holder becomes the ‘endorser’.
Endorser •The person to whom the bill is endorsedEndorsee •A person who is legally
entitled to the possession of the negotiable instrument in his own name and to receive the
amount thereof Holder •When in the bill or in any endorsement, the name of any person
is given, in addition to the drawee, to be resorted to in case of need Drawee in case of
need • In case the original drawee refuses to accept the bill or to furnish better security
when demanded by the notary, any person who is not liable on the bill, may accept it with
the consent of the holder, for the honour of any party liable on the bill. Acceptor for
honour 36
34. 34. Classification of Bills INLAND BILLS TIME BILLS TRADE BILLS FOREIGN
BILLS DEMAND BILLS ACCOMMODATION BILLS 37
35. 35. Inland Bill • A bill is, named as an inland bill if: It is drawn In India In India On a
person Residing in India Residing outside India Payable Whether in or outside India
Payable in India 38
36. 36. Inland Bill: Examples A bill is drawn By a merchant in Delhi By a merchant in Delhi
By a merchant in Delhi On a person In Madras In London In Madras Payable In Bombay
Payable in India In Japan 39
37. 37. Foreign Bill: • A bill which is not an inland bill is a foreign bill. It is drawn Outside
India Outside India Outside India Outside India On a person Resident in or outside India
Residing outside India Residing in India Resident in or outside India Payable In India
payable either in India or outside India payable either in India or outside India Outside
India 40
38. 38. Inland and Foreign Bills 41 • Those are drawn upon a person resident in India and
payable in India • Foreign bills are drawn outside India • They may be payable either in
India or outside India • They may be drawn upon a person resident in India Inland Bills
Foreign Bills
39. 39. Time and Demand Bill Time bill • A bill payable after a fixed time is termed as a
time bill. • Bill payable “after date” is a time bill. • These bills are payable immediately
after the expiry of time period mentioned in bills • The period varies according to
established trade custom or usage prevailing in country Demand bill • A bill payable at
sight or on demand is termed as a demand bill. • These bills are payable immediately as
soon as they are presented to the Drawee • No time of payment is specified • These are
also called sight bills 42
40. 40. Clean Bills and Documentary Bills 43 • When bills are drawn without accompanying
any document they are called clean bills • Documents are directly sent to the drawee •
When bills have to be accompanied by documents of title to goods like railway receipts,
lorry receipts, bill of lading • Types • D/A Bills: : if documents are handed over to
importer after he gives acceptance • D/P Bills: if documents are handed over to importer
only after payment is made Clean Bills Documentary Bills
41. 41. Accommodation Bills and Trade Bills 44 • A bill drawn and accepted not for a
genuine trade transaction is termed as an “accommodation bill”. • Two parties draw bills
 on each other purely for purpose of mutual financial help or accommodation • These bills
are discounted with bankers and the proceeds are shared among themselves • On due
dates, they are paid • They are known as kite bills or wind bills • A bill drawn and
accepted for a genuine trade transaction is termed as a “trade bill”. • These bills are
drawn suppliers or contractors on government departments for the goods supplied to them
• These bills are neither accepted by departments nor accompanied by documents of title
to goods • So, they are not considered as negotiable instruments • These bills are useful
only for the purpose of getting advances from commercial banks by creating a charge on
these bills Accommodation Bills Trade Bills
42. 42. Example • A, is need of money for three months. He induces his friend B to accept a
bill of exchange drawn on him for Rs. 1,000 for three months. • The bill is drawn and
accepted. • The bill is an “accommodation bill”. • A may get the bill discounted from his
bankers immediately, paying a small sum as discount. • Thus, he can use the funds for
three months and then just before maturity he may remit the money to B, who will meet
the bill on maturity. • In the above example A is the “accommodated party” while B is
the “accommodating party”. • Such bills are for accommodation of both the drawer and
acceptor. • In such a case, they share the proceeds of the discounted bill. 45
43. 43. CHEQUES • “A cheque is a bill of exchange drawn on a specified banker, and not
expressed to be payable otherwise than on demand”.- Section 6 of the Act • A cheque is
bill of exchange with two more qualifications, namely, • it is always drawn on a specified
banker • it is always payable on demand. • Consequently, all cheque are bill of exchange,
but all bills of exchange are not cheque. • A cheque must satisfy all the requirements of a
bill of exchange; that is, • must be signed by the drawer (maker of a bill of exchange ) •
must contain an unconditional order • on a specified banker • to pay a certain sum of
money to or • to the order of a certain person or • to the bearer of the cheque. • does not
require acceptance. 46
44. 44. Parties to Cheque •He is the person who draws the cheque, i.e., the depositor of
money in the bank.Drawer •It is the drawer’s banker on whom the cheque has been
drawn.Drawee •He is the person who is entitled to receive the payment of the
cheque.Payee •When the holder transfers or indorses the instrument to anyone else, the
holder becomes the ‘endorser’.Endorser •The person to whom the bill is
endorsedEndorsee •A person who is legally entitled to the possession of the negotiable
instrument in his own name and to receive the amount thereofHolder 47
45. 45. HUNDI • A “Hundi” is a negotiable instrument written in an oriental language. • It
includes all indigenous negotiable instrument whether they be in the form of notes or
bills. • The word ‘hundi’ is said to be derived from the Sanskrit word ‘hundi’, which
means “to collect”. • They are quite popular among the Indian merchants from very old
days. • They are used to finance trade and commerce and provide a fascile and sound
medium of currency and credit. • Hundis are governed by the custom and usage of the
locality in which they are intended to be used and not by the provision of the Negotiable
Instruments Act. • In case there is no customary rule known as to a certain point, the
court may apply the provisions of the Negotiable Instruments Act 48
46. 46. Distinction Between Bill of Exchange and Promissory Note PARTICULARS
PROMISSORY NOTE BILL OF EXCHANGE Number of parties there are only two
parties – the maker (debtor) and the payee (creditor). there are three parties; drawer,
drawee and payee; although any two out of the three may be filled by one and the same
 person Payment to the maker cannot be made payable by the maker himself the drawer
and payee or drawee and payee may be same person Unconditional promise contains an
unconditional promise by the maker to pay to the payee or his order there is an
unconditional order to the drawee to pay according to the direction of the drawer. Prior
acceptance A note is presented for payment without any prior acceptance by the maker.
payable after sight must be accepted by the drawee or someone else on his behalf, before
it can be presented for payment. Primary or absolute liability The liability of the maker of
a promissory note is primary and absolute the liability of the drawer of a bill of exchange
is secondary and conditional Relation The maker of the promissory note stands in
immediate relation with the payee the maker or drawer of an accepted bill stands in
immediate relations with the acceptor and not the payee. Protest for dishonour Foreign
bill of exchange must be protested for dishonour when such protest is required to be
made by the law of the country where they are drawn no such protest is needed in the
case of a promissory note Notice of dishonour When a bill is dishonoured, due notice of
dishonour is to be given by the holder to the drawer and the intermediate indorsers no
such notice need be given in the case of a note. 49
47. 47. Distinction Between Bills of Exchange and Cheque Bill of Exchange Cheque Usually
drawn on some person or firm Always drawn on a bank Must be accepted before its
payment can be claimed Does not require any such acceptance Drawn payable on
demand, or on the expiry of a certain period after date or sight Only be drawn payable on
demand A grace of three days is allowed in the case of time bills No grace is given in the
case of a cheque The drawer of the bill is discharged from his liability, if it is not
presented for payment The drawer of a cheque is discharged only if he suffers any
damage by delay in presenting the cheque for payment Notice of dishonour of a bill is
necessary No such notice is necessary Not needed in the case of bill A cheque may be
crossed Must be properly stamped It does not require any stamp A bill payable on
demand can never be drawn to bearer A cheque drawn to bearer payable on demand shall
be valid The payment of a bill cannot be countermanded by the drawer The payment of a
cheque can be countermanded by the drawer 51
48. 48. References • Negotiable Instruments Act, 1881
http://www.ddegjust.ac.in/studymaterial/mcom/mc-207-f.pdf • 5 characteristics of a
negotiable instrument with examples, http://www.preservearticles.com/201104065104/5-
characteristics-of-a-negotiable-instrument-with- examples.html 52

(5) 9.1 WHAT IS 'NEGOTIABILITY'? The term 'negotiability' is applied to instruments

used to transfer money -such as bills of exchange, cheques, promissory notes, dividend
warrants, bearer debentures, and Treasury bills. These instruments are in fact called
'negotiable instruments'. The full legal title to a negotiable instrument is transferred by
delivery (or by indorsement and delivery) to the person receiving it, provided that he or
she has a good title to it, even if a previous holder had a bad title. The recipient must be
acting in good faith, and be unaware that a previous holder's title was a bad one. This
puts a negotiable instrument in a rather different category from an article - because if
someone bought a car, for instance, in good faith and not knowing that it had been
stolen before it was sold, the rightful owner could repossess it. The purchaser would
have to endeavour to get his or her money back from the vendor, and if he was
unsuccessful he or she would have to bear the loss. There are four essential
characteristics of a negotiable instrument: 1. The legal title to the instrument can be
transferred by simple delivery, or if it is payable to order by indorsement and delivery. 2.
The person to whom the instrument is negotiated can sue on it in his or her own name.
3. Provided that the instrument is apparently in good and regular order, the person to
whom it is negotiated obtains a good title to it. However, he or she must have taken it in
good faith and for value without any knowledge of defect in the title of the transferor.
The recipient's good title is not affected in any way if it is discovered that, in fact, the
transferor had a defective title (or no title at all). 4. There is no need to give notice of
transfer to the person liable on the instrument, i.e. the drawer of a cheque or bill of
exchange. A bill of D. P. Whiting, Mastering Banking© Desmond Whiting 1985
exchange (or cheque, which is a type of bill of exchange) is a written promise by the drawer that
anyone who takes it in payment will be paid in cash when it is presented to the person (or bank)
on whom it is drawn, provided that it is presented at the appropriate time and place. If I receive
a cheque payable to me and I indorse it and leave it about, then I do so at my own risk because,
if it is stolen and fraudulently passed on by the thief to someone in settlement of a debt, I would
have no redress against that person. He or she could pay the cheque into a bank account, and
thus receive value for it, provided that he or she had taken it from the thief or some subsequent
holder in good faith and without any reason to suspect that the thiefs title was not good. The
concept of negotiability makes an instrument acceptable as an alternative to notes and coin.
Anyone who sells goods against a cheque, for instance, which has already been negotiated,
has the satisfaction of know-ing that he or she has the right to present the cheque for payment
without cause to worry about any previous defect in title - always assuming, of course, that he or
she has no reason to be suspicious about any previous holder's title. 9.2 NEGOTIABLE
INSTRUMENTS Important Definitions Negotiable instruments are chases in action, which
means that they are property the right to which is enforceable in a court of law. The subject of
negotiability is covered in the Bills of Exchange Act 1882 which, together with the Cheques Act
1957, constitutes the statute covering not only bills of exchange (including cheques), but
promissory notes as well. The two Acts are clearly of considerable importance to the banking
student, and you would be wise to familiarise yourself with them. The comments that follow
contain, where appropriate, references to the relevant sections of the Acts. A bill of exchange
is defined by the Bills of Exchange Act as an un-conditional 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, or to the
order of, a specified person, or to bearer. A cheque is defined in the Act as a bill of exchange
drawn on a banker payable on demand. A promissory note is defined as an unconditional
promise in writing made by one person to another signed by the maker, engaging to pay, on
demand or at a fixed or determinable future time, a sum certain in money to, or to the order of, a
specified person or to bearer.