 NUR HIKMAH EDI

(DIAWEF09070006)
 FARAH NADZIRAH MOHD AZNOOR
(DIAWEF09070004)
DEFINATION OF NEGOTIABLE INSTRUMENTS
=negotible instruments are a class of document used in commercial and
financial transaction

=It is a form of transfer of property (owership) from one person to another in a

document evidencing a contractual obligation to pray money.

Section 13 Act 1949.

“Consent”.

Two or more person are said to consent when they agree upon the same thing
in the same sense.

CHARACTERISTIC OF NEGOTIABLE INSTRUMENTS.

(1) FREE TRANSFERABILITY: A negotiable instrument may be transferred by
delivery if it is a bearer instrument or by endorsement and delivery if it is
an instrument payable to order.

 (2) TITLE TO TRANSFEREE: The transferee, who takes the instrument bona
fide and for valuable consideration, obtains a good title despite any defects in
the title of the transferor.

(3) ENTITLEMENT TO SUE : The holder can sue in his own name.

 (4) CONSIDERATION : That every negotiable instrument is made or drawn for

a consideration. Thus, this need not necessarily be mentioned
EXAMPLES OF NEGOTIABLE INSTRUMENTS.
BILL OF EXCHANGE

> Is a form a written promise that the person who takes. The bill will be paid
the amount state in the bill when he presents it at the proper place & time.

CHEQUE

> Is a bill of exchange drawn on a banker payable on demand.

PROMISSORY NOTE

> Is a documents which contain a promise by a maker that he will pay a certain
some of money.

BANKER’S DRAFT

> Are issued by a bank to customers of good standing on request and agains
payment by the customer

TRESURY BILL

> Is a promissory note issued by the government to raise short term loan.

SHARE WARRANT

> Where share in a public company are fully paid up. The company may issue a
warrant where the bearer is entitled to the shares.

DIVIDEN WARRANT

> Refer to the profit.

DEBENTURE

> Loan agreement

TRAVELERS CHEQUE

> Is a cheque that enable the holder to draw cash on it.

CHARACTERISTICS OF BILL EXCHANGES

(1) IT MUST BE IN WRITING : The Bill of Exchange must be in writing.

 (2) ORDER TO PAY : There must be an order to pay. It is of the essence of the
bill that its drawer orders the drawee to pay money to the payee.

 (3) UNCONDITIONAL ORDER : This order must be unconditional, as the bill is

payable at all events

 (4) SIGNATURE OF THE DRAWER : The drawee must sign the instrument.

(5) DRAWEE : A bill, in order to be perfect, must indicate a drawee who should
be called upon to accept or pay it.

 (6) PARTIES : The parties to a bill are to be specified in the instrument with
reasonable certainty.

 (7) CERTAINTY OF AMOUNT : The sum must be certain. 

(8) PAYMENT IN KIND IS NOT VALID : The medium of payment must be money
and money only.

 (9) STAMPING : A Bill of Exchange, to be valid, must be duly stamped.

 (10) CANNOT BE MADE PAYABLE TO BEARER ON DEMAND : A Bill of

Exchange as originally drawn cannot be made payable to the bearer on
demand.