Presented by :

Arti Dhanuka 05
Manish Jain 09
Disha Mordani 16
Ravindra Thappa 24
Introduction
What is negotiable Instruments
Characteristics
Types of negotiable Instruments
Parties to a negotiable instrument
Negotiation by endorsement
Presentment
Discharge from liability on notes ,bills and
cheques
Delay in presentment of cheque
Qualified acceptance
Material alteration



The Negotiable Instruments Act was
passed in 1881. Some provisions of the
Act have become redundant due to
passage of time, change in methods of
doing business and technology
changes.
A negotiable instrument is a document guaranteeing the payment
of a specific amount of money, either on demand, or at a set time.
According to the Section 13 of the Negotiable Instruments Act,
1881 in India, a negotiable instrument means a promissory
note, bill of exchange or cheque payable either to order or to
bearer. So, there are just three types of negotiable instruments
such as promissory notes, bills of exchange and cheques.
Property
Defects in title
Remedy
Rights
Payable to order
Payable to bearer
payment
Consideration

DIFFERENT TYPES OF NEGOTIABLE
INSTRUMENTS
Promissory Note:
A Promissory note is an instrument in
writing (not being a banknote 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. The person who promises
to pay is called the Payee.

Writing
Undertaking to pay
Unconditional
Signed
Certain persons
Stamping
Definition:
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.


A Bill of Exchange to be valid must fulfill the following
requirements:
1. The instrument must be in writing.
2. It must be signed by the drawer.
3. It must contain an order to pay, which is express and
unconditional.
4. The drawer, drawee and the payee must be certain and definite
individuals.
5. The amount of money to be paid must be certain.
6. The payment must be in the legal tender money of India.
7. The money must be payable to a definite person or according to
his order.
8. It must be properly stamped.

Rs 1,000 New Delhi, 25
Aug11
One month after date pay to Mr. A.K.Jha
or order the sum of rupees one thousand
only, for value received.

To
Satyender
12 miles
MIM, Ranchi Sd/Ritesh.
Revenue
Stamp


Definition:
A cheque is a bill of exchange drawn upon a
specified banker and payable on demand.

Specimen of a cheque
Cheques are usually printed in the form shown below.
e.g.

Date
Pay A.B. or order (or bearer) the sum of Rupees Five
Hundred only Rs. 500/-
To
X.Y. Bank Sd/C.D.
1. A cheque must fulfill all the essential requirements of a bill of
exchange.
2. A cheque may be payable to bearer or to order but in either
case it must be payable on demand.
3. The banker named must pay it when it is presented for
payment to him at his office during the usual office hours,
provided the cheque is validly drawn and the drawer has
sufficient funds to his credit.
4. Bills and notes may be written entirely by hand. There is no
legal bar to cheques being handwritten. Usually , banks
provide their customers with printed cheque forms which are
filled up and signed by drawer.
5. The signature must tally with the specimen signature of the
drawer kept in the bank.

1. Open Cheques: An open cheque
is one which is payable in cash
across the counter of the bank

2. Crossed Cheques: A crossed
cheque is one which has two
short parallel lines marked
across its face. It can be paid
only to another banker.
The advantage of crossing is
that it reduces the danger of
unathorised persons getting
possession of a cheque and
cashing it.
A crossed cheque can only be
cashed through a bank of
which the payee of the cheque
is a customer.
1. General Crossing: The simplest mode of crossing is to put two
parallel lines across the face of the cheque.This is called
General Crossing.
A cheque crossed generally will be paid to any bank through
which it is presented.

2. Special Crossing: When the name of bank is written in
between the parallel lines, it is called Special Crossing.
A cheque crossed specially will be paid only when it is
presented for collection by the bank named between the
parallel lines.


In addition to general or special crossing, a
cheque may maintain various remarks written
on it to restrict payment in certain ways.
The usual remarks are Account Payee Only
and Not Negotiable

Bills Of Exchange
Drawer
Drawee
Acceptor
Payee
Endorser
Endorsee
Holder

Promissory Note
Maker
Payee
Holder
Endorser
Endorsee
Cheque
Drawer
Drawee
Payee
Holder
Endorser
Endorsee

Subject to the provisions of section 58, a
promissory note, bill of exchange or cheque
[payable to order], is negotiable by the holder
by endorsement and delivery thereof



Presentment For Acceptance

Presentment For Payment
Mode discharge of parties


By cancellation of the name of the party (s.82)


By releasing a party to the instrument (s.82)


By payment of the amount due to the
instrument (s.82)



When the holder of a negotiable instrument
cancels the name of any party to the
instrument ,such party and all those persons
whose name appear subsequently to such
party are discharge from liability to the
holder.
If the homer of a bill of exchange allows the drawee
more than forty eight hours (exclusive public
holiday) to consider whether he will accept the bill
or not, then all previous parties not consenting to
such allowance are thereby discharged from liability
to such a holder.
According to s.84(2), for determining what is
a reasonable time ,regard shall be had to the
nature of the instrument ,the usage of trader
and of bankers ,and the facts of the particular
case.
Where any draft ,that is ,an order to pay money
drawn by one office of a bank upon another office of
the same bank for a sum of money payable to order
or demand ,purports to be indorsed by or on behalf
of the payee, the bank is discharge by payment in
due course.
Making or drawing of an instrument must be
unconditional .
Endorsement may be conditional.
Similarly ,acceptance of a bill too may be
conditional

I. Conditional acceptance
II. Partial acceptance
III. Qualified as to place
IV. Qualified as to time
V. Acceptance by some of the drawee only
Material alteration in an instrument readers it void
and inoperative.
An alteration is said to be material if it changes the
legal identity of the instrument .
If the alteration changes the business character of
the instrument or the right and liabilities of the
parties ,it is material alteration
If a bill of exchange which has been
negotiated is at or after maturity ,held by the
acceptor in his own right ,all rights of action
are extinguished.