4/14/2018 Classification of Negotiable Instruments

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Classification of Negotiable Instruments

Classi cation of Negotiable Instruments

1)   Inland Instrument-

A promissory note, bill of exchange or cheque which is 1) both drawn or made in India and made payable in India, or 2)
drawn upon any person resident in India, is deemed to be an inland instrument. A bill of exchange drawn upon a resident in
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India is an inland bill irrespective of the place where it was drawn.

2)   Foreign Instrument-

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An instrument, which is not an inland instrument, is deemed to be a foreign instrument. Foreign bills must be protested for
dishonor if such protest is required by the law of the place where they are drawn. But protest in case of inland bills is
optional.

3)   Insruments payable on demand- Subscribe

A cheque is always payable on demand and it cannot be expressed to be payable otherwise than on demand. A promissory
note or bill of exchange is payable on demand-

1. when no time for payment is speci ed in it.

2. when it is expressed to be payable ‘on demand’, or ‘at sight’ or ‘on presentment’. The words ‘on demand’ is usually in a Related Articles:
promissory note, the words ‘at sight’ are in a bill of exchange.

4)   Ambiguous Instrument-  Parties to Various Types of

Instruments

When an instrument owing to its faulty drafting may be interpreted either as a promissory note or a bill of exchange, it is  What is a Bill of Exchange?
called an ambiguous instrument. Its holder has to elect once for all whether he wants to treat it a as a promissory note or a  Meaning and Types of Hund
bill of exchange. Once he does so he must abide by his election.
 Discharge of a Contract by
5)  Forged Instrument-
 Legal De nition of Negotiab
An instrument is a forged when it is drawn, made or alternated in writing to prejudice another man’s rights. The most  Features of Negotiable Inst
common form of forgery is signing another person’s signature, signing the name of ctitious or none existing person.
Fraudulently writing the name of an existing person is also forgery.  Forgery is a nullity and, therefore, it passes no title. No  Types of Agents
holder of a forged instruments acquires any right on the instruments. Even a holder in due course gets no title if he comes  Cheque: De nition, Feature
into the possession of a forged instrument. A person has to pay money on a forged instruments by mistake, can recover it
from the person to whom he has paid it.  Crossing of Cheques

 Legal De nition of a Contra

6)  Bearer And Order Instruments-

An instrument is a bearer instrument when the amount payable thereon is payable to the bearer and he as a holder and in
lawful possession thereof is entitled to enforce payment due on it.
Categories
Related Articles:
 Business Analysis
Parties to Various Types of Negotiable Instruments
What is a Bill of Exchange?  Business Communication
Meaning and Types of Hundis
 Business Ethics
Discharge of a Contract by Breach
Legal De nition of Negotiable Instruments  Business Finance
Features of Negotiable Instruments
 Business Taxation
Types of Agents
Cheque: De nition, Features and its Types  Financial Management
Crossing of Cheques

 General Business Articles
Legal De nition of a Contract
 Global Business Environme
 Abey Francis  Mercantile Law  Business Law

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