`GROUP-7

In India ,the Negotiable Instrument Act was passed during 1881 and came into force March 1882. It has 142 sections and 17 Chapters .Section 138 and 142 were added in 1988 and these Section came into effect April 1,1989. This act is applicable to entire India,

1)Negotiable instrument is the story of how a piece of paper comes to be the centre of all commercial transactions. 2)It can be exchanged for all kinds of goods and services. 3)Human society has known about the concept of exchange for a long time .To facilitate trade precious metals like gold,silver and copper became the medium of exchange. 4)The NIs act developed with the practices of trades over centuries ,later law came to be written down and called the Nis Act-1881

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1)Promissory note 3)Bill of exchange 9)Check

1)Payable to order: An instrument which is payable to a particular person or to other persons on his order is called payable to order. 2)Payable to bearer: This is an instrument payable to anyone who bears it or presents it for payment. 3)Payment on demand: An instrument payable on demand is to be paid whenever presented. 4)Not payable on demand: This is an instrument cabable of being negotiated but not payable on demand. An example of this is a post-dated cheque.

To be a negotiable instrument under NIs act the following requirements must be met: ` The promise or order to pay must be unconditional; ` The payment must be a specific sum of money, although interest may be added to the sum; ` The payment must be made on demand or at a definite time; ` The instrument must not require the person promising payment to perform any act other than paying the money specified; ` The instrument must be payable to bearer or to order.

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"Promissory note". A " promissory note" is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument. A signs instruments in the following terms (a) "I promise to pay B or order Rs. 500." (b) " I acknowledge myself to be indebted to B in Rs. 1,000 to be paid on demand, for value received." (c) I promise to pay B Rs. 500 and all other sums which shall be due to him." (d) I promise to pay B Rs. 500, first deducting there out any money which he may owe me."

A "bill of exchange" is an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. Bills of exchange are used primarily in international trade, and are written orders by one person to his bank to pay the bearer a specific sum on a specific date. Prior to the advent of paper currency, bills of exchange were a common means of exchange.

A bill of exchange is essentially an order made by one person to another to pay money to a third person. A bill of exchange requires in its inception three parties the drawer, the drawee, and the payee. The person who draws the bill is called the drawer. He gives the order to pay money to the third party. The party upon whom the bill is drawn is called the drawee. He is the person to whom the bill is addressed and who is ordered to pay. He becomes an acceptor when he indicates his willingness to pay the bill. The party in whose favor the bill is drawn or is payable is called the payee. The parties need not all be distinct persons. Thus, the drawer may draw on himself payable to his own order.

Under Section 6 Act No. 55 of 2002a)"A "cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand b) "A cheque in the electronic form" means a cheque which contains the exact mirror image of a paper cheque, and is generated, written and signed in a secure system ensuring the minimum safety standards with the use of digital signature (with or without biometrics signature) and asymmetric crypto system.

1)The person who draws up a bill of exchange or cheque is called the drawer of the instrument. 2)A person who is entitled to the possession of a negotiable instrument in his ownname and and to receive payment is called the holder of the negotiable instruments. 3)A person who holds an instrument for a consideration is called a holder in due course.

"Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder. ` An instrument can negotiated by a person who is capable of receiving the money ` Modes of Negotiation:1. Mere Delivery means delivering the instrument to bearer. 2. "Endorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument. Endorser" means a person who makes an endorsement

In case of lost of negotiation founder of that instrument gets no title. If the signature of the maker or drawer is forged on negotiable instrument it is termed as forged instrument. And it has no existence in the law, thus is a nullity. It is presumed that the transfer of a negotiable instrument there is a consideration. There are interesting implications if there is no considerations.

The obligation of a party to pay the instrument is discharged as stated in Article 3 or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract. Discharge of the obligation of a party is not effective against a person acquiring rights of a holder in due course of the instrument without notice of the discharge.

A person who opens a bank account in the bank and deposits and withdraws fron his account is called an account holder. ` Types of cheque:A. Open or uncrossed:- is payable to person at the counter of the drawee bank on presentation B. Crossed:-payable only through collecting banker and not directly at the counter
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1). General crossing Two transverse parallel lines are marked across its face .It bears the words not negotiable between these parallel lines 2). Special crossing. Cheques crossed by two parallel lines with the Bankers name written in between.The banker to whom it is drawn shall pay only to the banker to whom it is crossed or his agent. 3). Crossed A/c Payee It is also called restrictive crossing.When the words a/c payee are written between the transverse parallel lines , it means that the proceeds of the cheque are to be credited to the account of the payee only.

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When bank comes aware of the defective title of the person presenting the cheque. When a customer has informed the banker about the loss of the cheque If a customer has issued a notice for the closing of his account. When there is a material alteration in the cheque or signature of the drawer does not tally with the specimen sign. If the balance amount in the account of the customer is insufficient to meet the cheque amount.

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