NEGOTIABLE INSTRUMENT ACT

Financial Documents That can be Transferred

What is it

Negotiable= Transferable. Instruments= Documents. Documents= Records, papers which give some right.

It behaves like money.  Negotiable Instrument is transferred just like a currency money. . Person who gets the document in course of business gets a good title even when title of the person transferring is defective.

D gets good title.000. .Good title to transferee than transferor. Contract is voidable. Actually car is used for 20.000. He pays him by giving a promissory note of Rs 25.000 Km. But before B avoids the contract it C has transferred the promissory note to D for Steel bought from him.    A buys wheat from B for Rs 25. B transfers it to C for a car which is used for 5.000 Km.

1. 2.Three Types of Instrument. . 3. Promissory Note Bill of Exchange Cheque.

  To Anya Sharma. Anya Sharma or bearer . Date Mumbai  I Promise to pay 3 months from the date. Pune 400101 Shukla. Signed Deepak .Illustration promissory Note  Rs 5.000/25/02/2011  400025. a sum of Rupees Five Thousand only.

Aurangabad. five thousand only. Signed Deepak Shukla. or order .000/25/02/2011  Date Nanded     Pay 3 months after sight to Bank of Maharashtra .Illustrations Bill of Exchange  Rs 5. Nanded. A/c Textile Corporation of Marathwada. To Bharat Textiles & Co. Accepted .

 .Parties to the Instrument  PROMISSORY NOTE Maker. Payee. Holder.

 . Holder. Acceptor.Parties to the Instrument  BILL OF EXCHANGE:Drawer. Payee.

:. (instrument is written payable to person or bearer)    Instrument payable to a particular person or order:By delivery & endorsement( Holder will sign on the back) .By delivery only.Negotiation    Negotiation may be :By Delivery or By delivery & endorsement. Instrument payable to a bearer.

 Presentation for acceptance.  Presentation for payment. .Presentation.

2.  TWO TYPES OF INSTRUMENT:Payable on demand Payable after sight. .Presentation for Acceptance. 1.

.YOU DEMAND MONEY & GET MONEY No question of first getting accepted .  Some Bills are payable after sight:.   Payable on demand:. Promissory note & cheque are payable on demand.SHOW ME THE BILL & THEN I PAY AFTER FEW DAYSthese require presentation. Maturity is to be fixed. No acceptance required.

They should be presented within reasonable time & definitely before maturity if maturity is already mentioned.Maturity  Date of maturity= Period mentioned +3 days of grace.  .

 This is required to demand payment. In case of bill:.   .Presentation for Payment. Should be presented within reasonable time.Generally on day of maturity or next day.

Payee to get it noted with notary. .  Also get certificate of protest.Bill Dishonored  If acceptor does not pay bill gets dishonored. Now a day’s payee demands for post dated cheque as a security.

Special Crossing:.Two parallel lines.Two lines & write banks name in between the lines. . Payment only thru bank & not at counter. Cheque should be presented only through that bank.Types of crossing     General Crossing:.

Payment only to the payee. If cheque is endorsed send the cheque to drawer & he should remove “account payee crossing”. Failing bank to attract penalty.Bank should pay only to payee. .Types of crossing      “A/c Payee “ Crossing. RBI instruction:.

Payee to give notice to drawer within 30 days. . Drawer to pay payee within 15 days.Penalty twice the amount +2 years imprisonment.Cheque Dishonored.     Sec 138:. Failing. payee to file complaint within 30 days in Court of Metropolitan Magistrate.

Thank you. Presented bySonal Pose --.95 Darshana Trivedi ---118   .

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