Chapter 5-Chapter 5-

Negotiable InstrumentsNegotiable Instruments

NegotiabilityNegotiability

Free TransferabilityFree Transferability Good Title free from Good Title free from

the defective title of the defective title of transferortransferor

GoodfaithGoodfaith Obtained for ValueObtained for Value Holder need not Holder need not

prove the above-they prove the above-they are presumed to existare presumed to exist

Transferability Transferability & & NegotiabilityNegotiability Nature of Nature of

Negotiable Negotiable InstrumentsInstruments

-Demand or -Demand or Time Time InstrumentsInstruments

-Order or Bearer -Order or Bearer InstrumentsInstruments

Types of Negotiable InstrumentsTypes of Negotiable Instruments

Negotiable by LawNegotiable by Law

-Bill of Exchange-Bill of Exchange

-Cheque-Cheque

-Promissory Note-Promissory Note Negotiable by UsageNegotiable by Usage

-Bank Draft-Bank Draft

-Dividend Warrant-Dividend Warrant

-Interest Warrant-Interest Warrant

-Certificate of Deposit-Certificate of Deposit

-Commercial paper-Commercial paper

Bill of Exchange: Bill of Exchange: Definition , Features & SpecimenDefinition , Features & Specimen

WritingWriting OrderOrder Unconditional orderUnconditional order Signature of MakerSignature of Maker

Certain DraweeCertain Drawee Certain AmountCertain Amount Payment of MoneyPayment of Money Nature of InstrumentNature of Instrument

Cheque: Definition , Features & SpecimenCheque: Definition , Features & Specimen

Features of a Bill of ExchangeFeatures of a Bill of Exchange

-writing, order to pay, payment of-writing, order to pay, payment of

money, signature of maker,money, signature of maker,

certain amount, bearer or ordercertain amount, bearer or order

Other FeaturesOther Features

-drawn on a banker-drawn on a banker

-payable only on -payable only on demanddemand

Differences Between a Bill of Exchange and a Differences Between a Bill of Exchange and a ChequeCheque

DraweeDrawee

NatureNature

FormForm

AcceptanceAcceptance

Days of GraceDays of Grace

Notice of DishonourNotice of Dishonour

Legal BarLegal Bar

Statutory ProtectionStatutory Protection

Countermanding PaymentCountermanding Payment

Death-Insolvency of Death-Insolvency of DrawerDrawer

Promissory NotePromissory Note

DefinitionDefinition Essential Essential

FeaturesFeatures SpecimenSpecimen

Crossing of ChequesCrossing of Cheques Meaning of Crossing Meaning of Crossing Types of Crossing:Types of Crossing:

General Crossing and General Crossing and

Special CrossingSpecial Crossing Examples of CrossingExamples of Crossing

Account Payee CrossingAccount Payee Crossing Not Negotiable CrossingNot Negotiable Crossing Persons Authorised to Persons Authorised to

Cross ChequesCross Cheques Cancellation of CrossingCancellation of Crossing

EndorsementEndorsement

MeaningMeaning Types of Endorsement: Blank, Full, Types of Endorsement: Blank, Full,

Restrictive, Conditional, Sans Restrictive, Conditional, Sans Recourse,Conditional,Facultative & Sans Recourse,Conditional,Facultative & Sans FraisFrais

Regularity of EndorsementRegularity of Endorsement

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