Synopsis: 01

Business Law

Negotiable Instrument Act-1881

1. Definition of Cheque (Sec.6)

A “Cheque” is a bill of exchange, drawn on a specified banker and expressed to be

payable only on demand.

2.What are the different types of cheque?

1). Open cheque: Payable in cash across the counter of the bank
2). Cross cheque: Two parallel lines marked across its face paid only
another banker not across the counter of the bank.

3. What are the different modes of crossing of a cheque?

1). General crossing: Putting two parallel lines across the face
2). Special crossing: Putting two parallel lines across the face along with bank name
between the parallel lines

4. Who can cross a cheque?

A cheque can be crossed by the drawer, the holder and the bank (for collection). But,
the holder and the bank can cross a cheque under the following circumstances: -
Where a cheque is uncrossed, the holder may cross it generally or specially.
Where a cheque is crossed generally, the holder may cross it specially.
Where a cheque is crossed generally and specially, the holder may add the words, "not
negotiable"

5. What do you mean by acceptance?

A bill of exchange is said to be accepted when the drawee puts his signature on it,
thereby acknowledge his liability under the bill.

6.What do you mean by Endorsement?

Endorsement means signature of the holder made with the object of transferring the
document. The person who makes the endorsement is called the endorser.

7. What is distinguish between dishonor by non-performance and dishonor by

non- acceptance?
Dishonor by non-performance:
When any negotiable instrument is not presented in compliance with the terms and
condition of the instrument and is dishonor subsequently on presentation by the
Drawee/Acceptor. It is known as dishonor by non-performance.

Dishonor by non-acceptance:
When only bill of exchange is presented to the Drawee for acceptance and the Drawee
disagree to give acceptance. It is known as dishonor of bill of exchange by non -
acceptance.

8. Who are called Drawer, Drawee, Payee, Holder and Acceptor of a Bill of
Exchange?
Drawer: The maker of the bill of exchange
Drawee: The person who is directed to pay the bill of exchange.
Payee: The person who will receive the money
Holder: The payee who has the custody of the bill of exchange
Acceptor: When the drawee accepts the bill, the drawee becomes the acceptor.

10. Cheque crossed with the words 'Not Negotiable'- what does it mean?

A cheque marked with the words "Not Negotiable" can be transferred or assigned by the
payee. This sort of words on cheque refers that transferee of this cheque will get the
same right, as regards payment, as the transferor had.

11. What is the difference between a general crossing and special crossing of
cheque?
The difference between a genera crossing and special crossing of cheque as follows:
Subject General cross cheque Special cross cheque
Definition When cheques are crossed by When cheques are crossed by two
two parallel line on the left parallel lines mentioning the name of
corner of the cheque any bank, then it is known as special
mentioning or not mentioning crossed cheque.
& co, not negotiable, account
Collection pay
The etc, thencan
cheque it isbeknown as The cheque only be collected through
collected
through any bank. the bank mentioned in the cheque.

Tanvir Hasan, FCA

General Manager
CFO & Company Secretary
01715094176
tanvir24@hotmail.com