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NI Act. 1881 came into force on 1st March 1882. After liberation it was adapted
through Bangladesh Bank Order – 1972 (P.O.127). Originally there were 141
sections. As the section 2 & 139 have been repealed through Amendment, present
number of section of the Act. is 139.
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Specimen copy of Bill of Exchange
Please pay Tarun or (to his) order the sum of Taka Ten thousand only for value
received.
To Stamp
Sameer
Address:
Rajib
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Meaning of Negotiable: Section 14 states as under:
Promissory Note:
Section 4 states as under:
Characteristics:
It must be written undertaking.
The maker must sign.
The amount payable must be specific(certain).
Payee of the note must be specific.
Unconditional promise.
It should be stamped.
It must be an undertaking to pay money and only money.
Parties involved:
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Bill of Exchange:
Please pay Tarun or (to his) order the sum of Taka Ten thousand only for value
received.
To Stamp
Sameer
Address:
Rajib
Characteristics:
Parties involved:
Drawer, Drawee, Acceptor, Payee (Endorser & Endorsee)
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Cheque:
Section 6 states as under:
Characteristics:
Parties involved:
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Types of Cheque:
i. Bearer Cheque
ii. Order Cheque
The cheque which contains the word “bearer” after the payee’s name is a “bearer
cheque”.
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Order cheque
The cheque in which the words “or bearer” are striken out and order is given by the
drawer to a specific person for payment, is an order cheque.
The order cheque may be paid over the counter but the drawee bank shall have the
responsibility to verify the identification of the named person.
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Crossed Cheque
If a cheque bears two parallel lines on its face it is to be called crossed cheque.
Usually a cheque is crossed on the top of its left corner.
Types of crossing:
General crossing
Special crossing
General Crossing:
“Where a cheque bears across its face an addition of the words “and company” or
any abbreviation thereof, between two parallel transverse lines, or of two parallel
transverse lines simply, either with or without the words “not negotiable”, that
addition shall be deemed a crossing, and the cheque shall be deemed to be crossed
generally.”
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Characteristics of General crossing:
Except “A/C payee” any cheque with general crossing can be transferred from one
person to another but with endorsement. In case of bearer cheque it can be
transferred from one person to another by mere hand to hand delivery without any
endorsement.
Cheque with “Not negotiable” crossing relates to “section 130 of NI. Act. which
refers to the fact that the person who is taking the cheque shall not have and shall
not be capable of giving a better title than that he took.
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Special crossing:
According to section 124 of NI. Act “ a cheque shall be treated as specially crossed
cheques if it bears across its face the name of a banker either with or without the
words “negotiable”
Example:
Stage-I:
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Stage-II: Mr. Karim as holder may cross it as under.
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ii. When a cheque is crossed generally the holder may cross it specially.
Example:
Stage-I:
Stage-II:
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iii. Where a chque is crossed generally or specially the holder may add the word “Not
negotiable”.
Example:
Stage-I:
Stage-II:
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iv. Where a cheque is crossed specially, the banker to whom it is crossed, may again
cross it specially to another Banker his agent for collection.
Stage-I:
Stage-II:
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v. When an uncrossed cheque or a cheque crossed generally is sent to a banker for
collection it may cross the same specially to itself.
Example:
Stage-I:
Stage-II:
No one is authorized to change/alter the crossing except the above cases covered by
NI. Act.
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Endorsement:
When the maker or holder of a negotiable instrument signs the same, otherwise than
as such maker, for the purpose of negotiation, on the back or face therof or on a slip
of paper annexed thereto, or so signs for the same purpose a stamped paper
intended to be completed as a negotiable instrument, he is said to endorse the
same, and is called the “Endorser”.
Example:
Stage-I:
order
Stage-II:
Overleaf of the cheque
Karim
Here:
Mr. Karim is Endorser
Mr. Rahim is endorsee
Mercantile Bank Ltd. is the drawee bank.
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Blank Endorsement – Full Endorsement
According to section 16 of NI. Act. if the endorser signs his name only, it is said to
be Blank.
Example:
Blank Endorsement
Stage-I:
order
...................................................
Karim
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Full Endorsed
If the endorser signs and accords a directive for the amount mentioned in instrument
as to pay to a specified person or to his order. It is said to be endorsed in full.
Example:
Stage-I:
order
Stage-II:
overleaf of the cheque
Mr. Karim has made a full endorsement mentioning a specified person Mr. Rahim.
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Partial endorsement:
order
Karim Invalid
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Restrictive Endorsement:
Example:
Stage-I:
order
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Stage-II:
overleaf of the cheque
Karim
Mr. Rahim has nominated Mr. Jashim as agent and restricted the endorsement by
mentioning “for the A/C of Mr. Karim”.
Conditional Endorsement:
i. Without recourse : Where endorser excludes his liability for the endorsement
made.
Example:
Stage-I:
order
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Stage-II:
overleaf of the cheque
Karim
Without recourse indicates that if the cheque is dishonoured or paid it otherwise Mr.
Jashim Shall have no right to claim on the instrument.
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Facultative Endorsement: In case of dishonour of cheque the Endorsee requires to
give notice of dishonour to the endorser. It is an endorsement whereby, endorser
waives some of his rights on the instrument. Under facultative endorsement
endorser shall endorse the cheque in the following manner.
Example:
Stage-I:
order
Stage-II:
overleaf of the cheque
Karim
Here endorser shall remain liable to the endorsee even notice of dishonour is not
served.
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Invalid & irregular endorsement:
Example: i.
order
Original endorsement
Karim
Valid
Rahim Jashim
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Example: ii.
Endorser shall spell his name in the same way as it appeared in the cheque or Bill
as payee or endorsee.
Example:
Stage-I:
order
Stage-II:
overleaf of the cheque
Karim
Rahem,
(Rahim)
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Any prefix such as Mr., Mrs., Dr. , Colonel, General etc. to the name of the payee or
endorsee should not be included while endorsing the cheque or instrument.
Example: iii.
overleaf of the cheque
i. Stage-I
Pay to Colonel Rahim or order
Karim
Rahim (Colonel)
Karim
(Mrs. Rahim)
Regular
Sharmin
(wife of Mr. Rahim)
Reasons of Dishonour of Cheques:
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Banks may dishonour a cheque if it is found to be not in order without incurring any
liability thereagainst:
Wrongful dishonour
As per section 138 of NI Act if cheque is issued by the drawer and subsequently it is
dishonoured, drawer may be punished with 01(one) year imprisonment or more with
fine twice the amount of cheque or with both.
Before going to the court payee shall have to fulfill the following conditions.
a. The cheque should be presented within a period of six months from the date
of its issuance or within its validity.
b. The payee must serve notice of dishonour within 15 days of dishonour.
c. Failure of the drawer in paying the amount of cheque within 15 days of the
receipt of the notice by the payee.
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Holder:
The “holder” of a promissory note, bill of exchange or cheque means any person
entitled in his own name to the possession thereof and to receive or recover the
amount due thereon from the parties thereto.
“Holder in due course” means any person who for consideration becomes the
possessor of a promissory note, bill of exchange or cheque if payable to bearer, or
the payee or endorse thereof, if payable to order, before it became overdue, without
notice that the title of the person from whom he derived his own title was defective.
“Payment in due course” means payment in accordance with the apparent tenor of
the instrument in good faith and without negligence to any person in possession
thereof under circumstances which do not afford a reasonable ground for believing
that he is not entitled to receive payment of the amount therein mentioned.
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