Negotiable Instruments. OEFINTONS Negoidi instruments - Promisor note Bill of exchange 9 Shoave Braver and drawee Drowoo in ease of need Accopior ‘AccopI for Hono Payee Bebrer Inland anc foreign instrument Ambiguous nsromont ELEMENTS OF NEGOTIABLE INSTRUMENTS CHARACTERISTICS OF NEGOTIABLE INSTUMENTS DISTINCTIONS, Dilferences betvieen promissory note ang bill of exchange Directs Eetten bil of exchange and cheque Dilferences between promissory nate and chevve cHEQUes Kinds of cheques. Dishonour of cheques NOUDER AND HOLDER In DUE COURSE Holder Holder in cue course Panaenges Belircen holder and elder in due course | svleaes ofa hoider in dus course NEGOTIATION ‘Who may negotiate Duration of nenotabiiny Moses of negotiation, Delnory ¢ : Endorsement , Kings of endors SE AN INSTRUMEIT LABILITY OF THE PARTIES MATURITY OF NEGOTIAGLE INSTRUMENTS PRESENTMENT presentment for payment to vinoin Place of preseniment fo Tinie of presentment for What consti PavEENT Paymant to whem Payment in due course DISHONOUR Dishonour by non-payment Pishonour by non-aeteptance Notice of dishoneur Consequences of net giving notice of dishonour ayment S valid preser “creole KK an xi eae PSI FLAK Unies ot Dh Scanned with CamScannery : 7” NOTING AND PRotEsT Noting Protest . Protest for better security DISCHARGE Discharge of parties Discharge of instruments Recommended Books: Shaukat Mahmood: The Ne Enlarged Edition, 1991 ; (@ AM. Choushry: The Negotiable Instruments Act, All Pakistan Legal Decisions, 9" Edition, Lahore; 3. Bare Act: The Negotiable Instruments Act 1881 . ‘gotiable Instruments Act, Legal Research Centre, 3" Revised & % Khurshid E matoslon —bd ecom Scanned with CamScannerID CRESS’ \gORY NOTE, BILL OF EXCHANGE AN NN i 4, SPECIMEN OF PROMI —_—— M28 Te AGRO. we Promise to pay on_demand to National Ban orn poo T9K) Es. HY, the sum i Ltd,, or order, FOR “15.6, 136.09. b The CORRECT ‘ Zoey ss \ UNPAID) PAY TO ees em ST awe: renaypn go Seach save ee BAe Lhe BD { ~ TF OEP j Eig nationat Bank Lie. wet Bo ratonaison ne sare Br j ao Imamsgon} Branets ND saqoave Scanned with CamScannerfor value received and protvrent Bo ther charges it any, thereon from nk. Pensation, if any, imposed by the B For and on behalf of ... + Co. Ltd Director .. Director ReNs Director Director Director Director » Director - noe Not (Ae levenus Stamp in appropriate place) DOUBLE PARTY DEMAND PROMISSORY NOTE Date: On demand we, .... Promise to Pay..... OF Order at Islami Bank Bangladesh Ltd... the sum of TK... see (Taka 4 {or value received and profivtent & other charges,if any, thereon from this date and compensation, if any, imposed by the bank, (Affix Revenue Stamp) Rovenue ‘Stamp ‘Pp rnarac0 Pods Scanned with CamScannerAcct DEFINITIONS Negotiable instruments, i Negotiable means ‘tran isferable by dativery” whi reates a right in favo ‘ontzins the law relating to negotiable instruments, The Act Shale with three kinds of negotiable instruments, namely Promissory notes, bills of exchange and cheques, ic instrument means ‘a written docuinent which \ ur of some person,’ Literally, Section 1301) of the Act provides that ‘A ‘nego Sxchiange or cheque payable ef negotiable instrument mane ‘e writen document | transferable by dlivory. | | lable instrument means The Negotiable Instrument Act 1881° ¢ Ly promissory rote, bill of 13 fu dg| thet to ofder or to bearer] ars Nae te Aga Payable to payee or to his order,® e.g pay toAcr order, or pay to incite Of A SF POY 10 A. B or order ete, Bath shee a eee j {adicating an intention that t'shall not bs te Sno conan the term ‘payable 1 bearer’ means payable to a person who by negotiation Denes, a0 Possession of a negoiaie ineirument, wivek Payable to bearer For instance, pay 0 i bearer oF pay toA cr bearer, or pay toa Bor bearey ne i |n practice, notes and bi From the art mase payable to crder wile cheques are made payable fo bearer, Far Sete a se, a nagetabe instrument may be dened as» eonnecual Patan aN sled by Ths nary exacsteg Ewen Steer to Pay @ certain sum of money, meas 2 fixed or dater } ie oF oreaet fe Beare: When anther arson ic ecerenna is cesta, SH? Person must be named er ihavsise nekared SSE ie carta 7 On the basis of dist instrument is one oF By endorsement and delivery inter sue on it in his transferee for vat egoliable instruments. He says "A negotiable m of trade oF by lav, tsansferable by Gelvery cumstances that (a) the holder ott tee the time being may Eee in it passes, ites from oguiies, to & behets '9g ny asfect in tha thle ot the sranstenes lus, notwithesa | echo Spgnaianstans i imaenaece isan instrument in wring containing an irecling a certain de RS Gemand é¢ sta fixed or Feame certain sum of money only to, orto tre mea trument” For instance, an eiter 20 order of A insisting O-t9 gay 6 Ta ge one ares of tne ns exchange, (Gaeaue g seclion 6 of the Act cheque" is a bill of exchange felowpesea ob favebe oe ovides that $190 on 8 sone barker and ed'0 Bo payable clhenste nish on ooo FM alongs (Bon Sead Drawer and drawee Cr > (Be eta of xenon rcs sl in taser he pron thereby Seecod to pay ss-caec ne *diawsa Drawse in ease of nese ‘When in the bi i or in any endorsement therson t raviee tobe resorted to in case of need, such perso tame of any person is given in adaition 1 the called a “drawer 2 in case of need.” AStXXVL of 1881, hernair ened waste A Colao (if sectian 13 reds Whe «poor ate, Fartpeaa De rovbl wo eee oF specie panon sod tte hist sen on bsepton® “Explatton (to seston 13 yeas * ‘able or which i expressed be erchongs o hag, Get igh or by endorse, 5) mor hore at A promissory nats, bof ach aS toa paisa po, chi ai o ond which Is expe abe so ncn titshall at be estrble™ oes etn ond cee gy tt indicating 3 & * cannes Tsay ad Poe oe jn accodane wih Arle 1 and 42 of Schedule othe Sap Ast 999 * Section 32, Scanned with CamScanner|“ 4. Anote can be dravin Mant po eee = em Re > y 7 3 [Dishonour of chacuos’ 2) When the offenco of dishonout of cheque is committed 1 ngXS.7 Section 198 ef the Ack provides thet Where eny cheque .. ie returned by the bark unpalt,elthet NG Great of thot eccount ie inauificient to nene'r the fom that account by an agreement mage, Mad en offence we punishats e ot dishonour cf a cheque becomes pur GAO yor the oft: & BP hocorcing tothe Ps NE OIG RSlamunk ot ves eerelons, They sro aw the tulfiment of Wve been precenicd lo die Gunk wihin 8 poriod of ax months from the date an He NUS ror or thin he porto of le valli, whichever i earion, By the payee oF the nolder in dus couree of the chaquo, as the case may be, must make @ demand habe the payee oF he Boing sid aiawunt of money By shina @ neiee_n china ip the dra of he Segue, yatta tn days of the ceil afalrteton by him fom the oni fagarding tho return aigue as unpald, ane eee rar nat fl to make the pomment of to ead amount of ney tothe toe eee tne coee may ba to tre hid in uo couree of te cnet, ln thy ay of he eoeipt ofthe notice. (Oat are the punishments prescribed for the offence of dishonour of cheque “According to Section 138 of the Act, @ person, vino commis the offence of dishonour of cheque, shall be ‘punished with imprisonment for a term which may extend to one year, or with fine which may ‘extend to thrice” the amount of the cheque, or with both.” vitow and wien the Court tokes cognizance of the offence of dishonour of cheque ‘According to Section 14tclause (2) of the Act, the court shall take cognizance of the offence of ‘dishonour of a cheque, only ‘uz0.2 comalain, in writing, mace by the payee or, the holder in due - ‘course of the cheque, as the case may be." ‘According to Section 14clause (0) of the Act, complaint must be ‘mak } ‘month of the date on which the cause of anlion adses.. 2 & Ps os " Pn oo of gece A oi Seccin 3) tess ttn. eng . LE on nee (@ifise tans ssid by tiny dvs, by Tse sees (ames) A. ye i ty he Nephron Amien 212090, ~ ‘0 Scanned with CamScannerigainst any order Per cent of th a Wino comm he amount oF ‘Sentence; ae a the offence of sentence Against him by een sa oreo } dishonoured shes = F hesus, may pre SE y ae atenour AY prefer ASE | LPishonour of cheque and Code of Gh of Civil Procedure Temedy available to the po the Negotiabe i ct ea warded the: 2B holder of a cishonoured cheque u Cit, ata slit sodtcnar ema ve voce sa Toe Ne gna Oo Order . Summary Prosainee Courier m BeoEaN TRE roe ey rovedure oh Negstaticy Court to recuse there set rch nae no seh struments, td deen ge eet ELD ce elder of a chegue retains te sate ‘Civ *-Bilenees of dishonour of choy According to Section 0 move the inl 140 (i) of the hae ean heave, evn =Ret20n io, at he timo te © offence of dishonour of a halle deomed to be guity of ure cone guilty of the off accordingly" Provided that a percy sence and was any. as well a5 the company, y ded against and punished Was committed without ‘his Sommission of suich offen lif he proves that the offence ‘Lall_due diligence to prevent the 140 (2) of he consent or connivance oy ne tector, manager ‘officer shal aise be proceeded against snd pray too > HOUDER AND HOLDERIN bug COURSE: geal Holder Section 8 of th ee 16 Act provides that “The holder of promissor FY note, bill of exer suse OF enslorsas wins ja sion of Ror the beat Deneficii Gener claiming thraugits anaes ‘The expienalion to ine 10 or ehegue Meta Sy section provides t i or chew es seainicti Gestoved, the person in poeseasicn ef t er tne heen were destruction shail be deemed to continue to o ts hotser Requirements of a holier o Fooonnt be either the payee (ie his name should appear as the payee, ¢ 41000), or the endows (6 his name shouts appear as th 1000), or the bearer, (ie 'a person who by reget instrument ; which is payable to bearer) b. His possession must be either actual or constru where A obtains possession of cn instrument by possession is untavul Holger in due course agi ection 9 of the Act provides that ' “Holder in cue course" means ony person Sho tor consideration) ef « promissory note, bil ef exchange or cheque if payable to bearer, or te Baite of endorses thereof, if payabic to order, befcre it became overdue, withut neice hat the the” of the person from whom he derived his own tie was defective ‘The explanation to the section provides that 9 Pay to X or order'tk, x9 endorse, © g Pay to Y of arder Tk. caf on comes into possession of a negotiate CAL ive. Again, his possession must be lawl, e g ‘aud, A does not become a holder, Ueccus’ his becomes the possessor of exchange or cheque is defective when he is of the provision of section 52," . the title of a person to a promissory note, bill of hot entitled to receive the amount due thereon by reason cours: Ider ef the ‘astrument according to section 8; 'b. Ho must have obtained possessicn of the i adequate ete. It may consist of money or any ol trument for consideration, which must b ner thing. Marriage has been held to b oncideration. donation deas not involve consideration, and 26 sucha donee cannot le course, jin due course; Sine Nsanials testansns (wads Section Scanned with CamScannerBae os Z| ee ears ate dean shore ae eR oti dyer rade hatden : REGS bold inde Cowst 2x3 c. He must have abcepted the instrument before it became overdue.” A person 10 2 instrument after it became overdue, will become a holder, but not a holder in due cours2; \ d, He must have accepted the instrument without notice that the tite of the person from whom he | i derived his own title was Jefective. He must act in good faith. He should exercise cus diligence ‘and satisfy himeelt that the instrument is free from defect of tite, Differences betwoon holder and holder in due course a. In the case of a holder, consideration is not necessary, ¢ g a donee can be a holder, While, in the. case of a holder in due course, consideration is compulsory. + b. In the case of a holder, good faith is not necessary. Whereas, in the case of a holder in due Ur course, good faith is essential ! cc. Not the holder, but a holder in due course gets a good title to the instrument, even though the title i" of the transferor was defective, ~~ = —= Privileges of a holder in due course a. As regards better title of holder in duc course o ‘ Accoring o section 58, the finder ofa lost instrument, or person, who obtains an instrument by } means of an offence, @ 9 @ thet, or a person, who’ obfeins an instrument by fraud, oF for an | Unlawful consideration, (@ ga promissory note issued in favour of 2 wines for giving false jis Beshective evidence), is not enilied to receive the amount cue thereon, since nis tilo Is defective. He can 1) Gre su neither enforce euch instr ment, noe can laitllyWanster fe Bui he Wansters & Bearer mSTamen Ue wedrunt OF an fasirument indorsed in blank to 2 holdar in due_cautsa, moaning 2 transferee, whe for Suelig” ‘Cohsiderstion, accepted it without notice that the Ue ot the Wansferor was cefective, sdch holder 92's a g090 and completa tte tat, Such halser is entied to receive the amount dus thereon. He can enforee such instrument and can also isvfuly transfer it. It cannot be pleaded against such holder that the instrument has been lost or has Been obteined by means of an offence, or fraud, or for an unlawful consideration. 7 | s#For instance X obtains an instrument by fraud, He is.not entitled to receive the amount due thereon. X transfers it to ¥, who for consideration, accepied it without notice that the ttle of Xvas ## defective. So, Vis a hokierin due course. ¥ gets a ‘good and complete tile’ Wot, He can tecouer 4oX” the amount due from the drawes. If payment ts refused, ¥ can aus the srawee. The Genes cen CF jake, against X. the defence of fraud. sul-not against Thus the precise Wal ne eee ae Bearer instrument or an instrument indorsed in blank, the holder in due course Guie a Geechee than the transferor, s an exception to the general ule that no body can Wranwler a Detter tt thon _ that his evn, (*Regorsing te seetion 3 ot the “Sabesquent holders: nce ‘purged of all. defect 88 8 channel to protect il 8 the Ina s of @ holder in due course, ite 0 ny aud Sr sane anette fee rm al leet, Unions ho Mreol? was a party to any fraud or ilsgality Where the tle of the transferor Is defocihe, ana nse ‘papotsice the Instrument toa holder in due course, that holcat ohigires sc-complate tile fe tne instrument Cobian 3 Gand anc Section 59A of the Act provides that“ A holder in due course holes the negotisle instrument free from any defect of title of prior parties, and free from defen: ¥ = an 1288 available to prior parties amon i Parties lable thereon” \ Section 298 of the Ast provides that where the signature of the maker, drawer, or acceptor of @ \b “Regotible instrument is forged, of where an endorsement is foraed, then such forged sce ‘i Paes erdorcement is totaly ineisetv The property in'the in N 0 BEISOn, who was The older at the ime of commis sirument remains sion of the for fete. As such the porsst oho gk, commits such forgery gets no fle fo, since here isd sompon re coor aeoen whe wy entitled to receive the amount due thereon, nor can enforce such instrument. nor san lawfully 27” Sensor t\ Sven tbe tamales tas pea i bevome a iigar iy Gus comes te ae ide transferee for value, the Wransieres oss not cin the instrument remains singe ilis-a cau, not ale * fective file, but of complste ebsence of ils 1 b, As regarés inchoate stamped instrument ji According to cection 20 (1) of the Aci, an inchoate stamped instrument is a paper signed and 1 stamped in accordance with the law relating to stamp duly chargeable on negotiable instruments, : and is either a wholly biank instrument or is a partial incomplete instrument. When oro cenoy t ‘delivers to another such a document, the latter is prima facie entitled to make or complete it into a proper negotiable instrument for the *© einiount specified therein, or ahere no amount is specified, for ‘any amount not exceeding the amount covered by the stam P. ; "secon 21 pov aA promis st bit of ecing elon dant il be deen ob veh han gps ij oth ae fit ove best nelson orn nasnaie Exe oe ae sion 53 19 presumption twat ahold tg holden in Aue enense 2 Scanned with CamScannertT > AQ APIO ao helor cana eP"2,1 Sten 20) ot na Any anaeZe Inehoato stamped Instrument, a 12 ler cannot recover more. than the 2Mount intended to be aid by the maker. But according to eo aeeNis© £0 Section 20 (2) ana (3 *, Where itis negotiated te « holder in due course, he can istumont has na eet eons ns nave a 8 a cannet plead thet te nto cover he ecg UPI accordance wah ssa, Met con emp bal Sufficient to cover the amount es —— ainst C, that the } ith the authority given by him ) © As regards liability of prior parties: Sate, Section 36 to we TG ze, ; ; rovi “Every prior 2 is liahle thoreonto | Bicguel holder indus councson ord Satisted In othe- words, athe pros pater ORBARSS negate stamens Ss CANBY the AGseptor and all the intervening endorses are TY continue to remain take op 2 holder in due course both jointly and Severs TE He carole any of | arery al the prior parties liable, unt! the instrament 's duly satisfied, fe payment is fegards fictitious bill of o3 anges | According to section 43 a fictitious il of exchange is an instrument were both the | ‘Giawereceae® DOSE ate ieligut petsans, iis damm tgs tious name and Gy a gretget ane indoracd by tha some hand Bese Stal and purperting toby | SURE gee an incor by ho som *-dimwe€s alsnature. and purpertina to b 2 etger cannot enforce afctious bilyBut where itis negotiated tp a holder in due course, he can enforce il, and its acceptor cannot plead that ie name is fictitious. : 4 redards instrument delivered conditionally or for a ecial revered conditionally or for a special p ‘According to section 46 of the Act od of delivered concit -i8 to take effect on the happening Sectty for a loa "san al purpose oniy feing 12 section 119 (a) of ths Act, unt the contra Holder or snogotabie insinens iow tet ia proved, the law 9 cnrs a hae i gue Soa af foG2%ts esteppte against donying origina valllty of instrument \ Pa brovides that No maker of 9 promissory ote and no ceauer ota ul ot exchanger choaus, andro aecerey ae oT exchange for the honour of the GFaWer, shal Ing onginly mae ce der 1 Ue S0UrE, be permited to deny tne wally Of ReneS originally made or drawn ee Peer however, can chalunge the validity of {he instrument on the ground that at the time of cing the instrument, he was a minor, or his signature hed bere forged or the ir thenwise Void-ab-inito. , instrument is pre" As regards estopple against denying capacity of payee to indorse Section 121 of the Act Provides that ‘No maker of a Promissory note and no acceptor of a bill of ‘ exchange payable to order shall, in a suit thereon by a holder in due course, be permitted to deny 2 the payee's capacity, at the date of the note or bil, to indorse ths comme ‘The payee must be Competent to indorse an instrument, otherwise the endorsee does not become Sect hetea!. According to section 26" a minor is incompetent ones But by vidue of Section 121 of the Act, a holder in due cou #¢ can enforce an instrument, despite the payee's ly Wo indorse the seme, “minen inknumen! Wat ae Coe eS cy whi ee Tnshretem. : BSA Bas org ar Raul AZ Sechion 2 Odere rae cS more event wo bolt uc RUE RE olde in dus course there und, fcsondng to section 20@) the mker shall be iste pon auch ‘natment or Sil! up therein, provided tht no porsche bape anying in excess of ihe sno ty PTS eon 0 signing me VETS Sexy ie nl ENE tee ity en i oe ada gear ts sof aha so sh le wall sa eal Sa Notts ed up SRE abe tints sid strictly ia aecondance withthe autor . | &. yo Paragraph 2 By dle 2 paapoph of stn oad exepica sedans f se Sook { 3 i Scanned with CamScannerNEGOTIATION oo BERS oysa ‘Section 14 of the Actprovides that 'When a Promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder ‘thereof, the instrument is_saie tobe Hegatied Crewsserecay t | Who may negotiate i ‘Section 81 of the Act provides that ‘Every ... maker, drawer, payee or endorsee ... of a negotiable | | instrument may .... indorse and negotiate the same." ty Te isance, a bl is drawn payable to Aor order. indorses ito 8, the endorsement net containing the words “or order’ pr any equivalent wards. B may negotiate the instrument 2 [he cxPlanation to the section provides that ‘Nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he isin lawful possession or is holder therevt, or rabies a payee or endorsee to indorse or nogotiate an insliumentorises Pot instrament, unless he is holder thereof. Duration of negotiabiitys Section 60 of the Act provides that ‘A negotiable instrument may be negotiated .. Satisfaction theruof by the maker, craivee, Until payment or | ‘or acceptor. | in olher words, an instrument can be negotiated unt ithas been finaly eischarged by payment. | Modes of negotiat f Negotiation by daliverys i | ah 47 ie AC pvdes tht *.2 Promissory note, bill of exchange or cheque GSVable to 5 ‘Bearer is negotiable by delivery therest ae bp mere rocks the signature of the transferor and the transferee becomes the holder thereat avers fs a ann to Key mstanes. A. the holder of a negotiable inctuymen! paysble reese GoliversItto B's agent to keep for 8, The instrument has been negotiated = eee ea SpEremIBsONY note, bl of exchange or cheque delivered on condition that itis not to take effect Of tne conatgerisi event is not negotiable (except in the hands of a holder for value wilkenn cones of the condition) unless such event happens.*= @ Negotiation by ena. ! eeeNE cages’ Si ro 2 Promissory note, bil of exchange or cheque the holder by endorsemrant sh = Exeenion to seson 4, Scanned with CamScannerPolivery is essential to completo making, endorsement or acceptance of an instrument ‘According to section 46% of the Act the making, acceptance or endorsement cf a promissory note, bill of exchange or cheque is completed by delivery, actual or constructive. 7 Delivery of an instrument for the purpose of transferring absolutely the property therein is essential to complete making, endorsement or acceptance of an instrument So, where a holder delivers an insirument to his servant for tafe custody orto his lawyer for fing @ gf suit, the delivery does not amount to negotiation, as there is no intention to pass property therein, snd, C7 - the Servant or lawyer acquires no till to the instrument, wy et oe Endorsement ¥ in simple words an endorsement isthe signature by the maker or holder usually made on the back of * yu! the inctrument for the purpose of negotiation, con Section 15 of the Act provides that ‘When the meker or holder of a negotiabe instrument signs the \as ‘same, ... for the purpose of negotiation, on the back or face thereof or on a. ‘slip of paper annexed so thereto so sans forthe same purpose a stamped paper tended tobe completed as anegsnane Sa. 4 instrument, he is said to indorse the same, and is called the “endorser’.” 7 Oe oe Section 29C of the Act provides that ‘A person placing his signature upon a negotiable instrument gthenwise than as maker, drawer or acceptor is presumed fo be an endorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity” Kinds of endorsements: @ Endorsement tin full ding {0 section 16 (1) of the Act, when the endorser ‘adds a direction:to pay the amount mentioned in the instrument to, or to the of, @ specified person,’ and signs his name, the endorsement is said to be “in ful", e.9. pay X or order. The person so specified is called the “endorsee" of the instrument. Act, an instrument rust be prosented for pyment by the holder oF of the Act, @ promissory note, bit made fo the duly autnerised in the case ofsdeath, of to the agent . = ik must be presented ai thet place. of exchange, or chedue must. be he maker, accent’ or grawee farsa! reepectaey According to Section 7 of he Act, presentment for payment mes be F200 Of the maketh sisvae, or to the legal ropreconiat Receiver, in the case c: bekruptey: Vbtace of resentment for paren ‘8. Where a place has bear specifed in tne istrume b Wore no place has been specified, i “must be presented for payment at the adda of the faker acceoler or drauie given inthe instument, and if no euch sdsrese & boss see ee Blace of business (known), cr at the nrinary askience i known) of the mekes wreve acceptor thereof, asthe ease mayb0." cc usiness of residence is also unknown, it may be . Where no place has been specified and place of business or res 7 imo of presentment for payment if ot a-oanker's, within banking hours." b. Anas grt do pyelo at spected pete ater dat or igh, must be preseied a fh chaque must order fo charge te cave, be presenta below the raion between the aoa he barker Nee been ater ne prjeden oa crawer Te a ae coma cnet estar © ranganh Brae Rah BAe SEO ne aainae a Sioeasa ceesensietne= GST >See stom Section 6S. © Soaton 86 8 Seth 67 0 Scanned with CamScanner te Wbebe preseded Cy Bante onby thea:a. A cheque must, in order to charge any person except the drawer, be presented within. a reasonable time. ~ f, Aninstrument payable on demand.must be presented within a reasonable.time,* 2kWhat constitutes a valid presentment Section 71A of the Act provides that — (1),To constitute @ valid presentment it shall be sufficient if instead of the original negotiable instrument a copy thereof certified to be true by the holder is delivered to the person li ” (2)if, after such delivery, the person liable to pay so demands, the holder shall allow him to inspect {he original negotiable instrument ..., and if the holder fails to do so within @ reasonable time, the presentment shall be deemed to be invalid.” ® wAment { 1 4 Payment to whom ' Section 78 of the Act provides that ' ... payment of the amount due on a promissory note, bill of i exchange or cheque must ... be made to the holder of the instrument or to the agent, iS Bae eames, nt "According 10 section 10 of the Act, in order to constitute a payment of a negotiable instrument as a Payment is due course, the following conditions must be fulflied: i ‘a. The payment must be made in accordance with the apparent tenor of the instrument, i ‘according to what appears on the face of the instrument to be the intention of the partes. It is { ecessary that payment should be made at or after maturity. 'b. The payment must be made in gros fath‘and-without negligénce, and under circumstances which donot aor a reagonais Siaued fr talavns Bn he sores etchant nee a ‘Teceive The amount. Thus where @ cheque bears forged signature of the crawer, and the banker \ “makes payrient without exercising due eare, then such e payments not payment ig due course cc. The payment must be made to tne pergon entitled to the possession of the instruméat d. The payment must be made in’money only. ApIsHONOU Dishonour by non-payment Section 92 ef the Act provides that ‘A promissory note, bill of exchange or cheque is said to be Tsfonoured by non-payment when the maker of the note, sccopter of the bil or draw cheque makes dataut in payment upon being duly required ts pay tes tame” Ot OF Srawee of the | Bishonour by non-acceptance Section 91 of the Act provides that ‘A bil of exchange Is eaia te be dichenoures by non-accemance when tho draviee, or one of several crawees nol beng partners, makes delat mraceumeee SN = being duly required to accept the bill or where presentment is excused and the bilo net aeceptea, Where the drawee is incompetent to contract, or the acceptance is qualified, the bill may be treated as dishonoured.” ae o Notice of dishonour 2 Notice of dishonour means the formal communication ofthe fact of dishonour of an instrument. a Alotice by whom Notice of dishonour must be given by the holder or some party to the instrument, who remains lable thereon.” Further, any party receiving notice of dishonour must transmit the same within a reasonable time to all prior parties in order to render them liable.” When an instrument is deposited with an agent for presentment and is dishonoured, the agent may give notice to his principal, as if he were the hglder, and the principal may then give notice of dishonour to the parties, whom he wants to hold liable. pti to whom given Jotice of aishonour must be given to all parties, whom the holder seeks to hold liable. No notice need be given to the maker of a note, or acceptor of a bill or drawee of a cheque, who are the principal debtors and have themselves dishonoured the instrument." Notice may be given tc a duly authorised agent, oro the legal representative in the case of death, ort the receiver, in the case of bankruptcy." % Section 72, ij Secion 73. 4 Scion 7 \ 7 Section 2, Section 95, Section 96, 4 paragragh of seston 93. ™ Section 4 Scanned with CamScannerCe ee ; 07 {! mol wares ! = s! j frde of ing notice Wh” Notice of dishonour may be oral or written. If itis weg it may be sent by post, It may be in ai form, but it must inform the party to whom itis given th wt instrument has been cishonoured, and it MA what way dishonoured, and'iNat he will be held liable Lereoa. It must Be given wih & Teaion bl {tbls dishonour, atthe place of business or (nthe case Such party nec ne place of Busines the residence of the Party for whom it is intended. "®? Hhen notice of dishonour is unnecessary ‘The parties are liable without notice of dishonour in the following cases:"? a: a. When it is dispensed with bby the party entitled to the notice, e g where the endorser, while signing in that capacity adds the words “notice of dishonour waived,’ no Notice of dishonour is required to charge the party; b. When the drawer of a ‘cheque has countermanded Payment, no notice of dishonour is required to charge the drawer; ¢. When the party with the banker, no notice of dishonour is required to charge the drawer; a Wien the party entitled to the notice cannot, after due search, be found, or the arty bound to give Whee unable to sive it, without any faut of his own, @ g death, accioonk okt ¢- When the drawer also happens to be the aeceptor, Ip the case of a promissory note, wich is not negotiable, since the endorser ‘ought not to indorse it 9. When the party entitled to notice instrument after dishonour and with full knowledge of facie, Consequences of not giving notice of dishonour - decharged econ egetabeinstument to whom nfce of dshonou i not giveiby the holder, i discharged from his ‘obligation under the. instrument, and cannot be sued,"* pa NOTING AND PROTEST : Noting : Pee oF isarel Serer oF eenonour of & nescliatia Intrumar, faeued by a notary puthcr a tne Itdae of ete or Eee payment eee ict ofl of exchange has teen aishonoured by nor-ecceptance or gon payment, the holder muy cause such dishonou! to be noted bys notary public upon the instrument, o pSn.a paper atiached thereto, or partly upon each, For thie the holder takes the bill or note to the “notat aa for aoceplance 6” pa nt Upon the arawee or acceoler ne Seuss 12.0 80 Roles the eame on th bic ene Anvee OF SeeeDIOT or SiPike wponeu snd mut spect the gate of dence fe et oe made Nassrttets be danene hagment nay nt Sen guressy Sanaa e260 arlod ‘holder treats it as dishonoured, and the notary charges. '% ¢ y Protest (Noting + Certificate) \ When a bill or note hi Promises to pay unconditionally the amount due on the mally, and on hi ‘a reasonable tim: | Protest for better security (applicable to bill) Im the case of a bill I of exchange, when the acceptor has bx | Publicly impeached, before maturit cause a notary pubic | {o demand better security cf the acceptor, and on ils being refeeee may, within a reasonable time, | ‘Sause such facts to be nated and certified, Such cerca is called a protest fey better security,” 8 Seeton 94 Section 98, ‘24 paragraph of ston 9, 8 Section 9, Scanned with CamScanner