Are you willing to know the detailed information about the Concepts Related to Negotiable Instruments? So here is the article which provides you the clean and clear information about the concepts Related to Negotiable Instruments? The Document of title or evidence of indebtedness that is freely transferable in trading as a substitute for money? Negotiable instruments are unconditional orders or promise to pay, and include checks, drafts, bearer bonds, some certificates of deposit, promissory notes, and bank notes.
Negotiable Instruments include mainly Two types, they are:-
- An Order to Pay
- Promises to pay
An Order to Pay:-It is a line, where you can put the Recipients name and it is legally a type of Instrument which is called as Negotiable.
Promises to pay:- An agreement between two parties such as the Lender and the Borrower, in which the lender promises to pay a set of amount of money on a set date. Usually made if the lender is behind in payments or payment is overdue.
Here I'm mentioning the most common types of Negotiable Instruments, they are
Promissory Notes | Bill of Exchange |
Check | Government Promissory Notes |
Delivery Orders. | Customs. |
Dishonor of Negotiable Instrument:-
It is Dishonoured either by non-acceptance or by the non -payment by the other parties, thereto can be charged with liability. And also it has a notice of Dishonor which comes under Section 93.
Characteristics of a Negotiable Instrument:-
Freely Transferrable:- The Property of a negotiable instrument gets transferred by a simple process of mere delivery is it is payable to bearer, endorsement, and delivery or payable to order.
Recovery:- One can use upon the instrument in his own name.
Presumption as to Considerations:- These are some of the Instruments that are to be presumed to have been like Made, Drawn, Accepted, Endorsed, Negotiated or transferred for Consideration.
Payable to order (or) bearer:- It must be payable either to order or bearer.
Holders Title free from all defects:- The holder in due course gets title free from all defects.
Presumption as to holder:- Every holder of Negotiable instrument is presumed to be a holder in due course.
These are the certain other Instruments which have occupied the character of negotiability as a result of usage of the trade such as
| Exchange Bills | Bank Notes |
| Share Warrants | Circular Notes |
| Bearer Debentures | Dividend Warrants |
| Share certificates with blank Transfer deeds, etc. | - |
Types of Cheques:-
These are a Different KInd of Cheques,
| Open Cheques | An Open Cheque is one which is Payable in cash across the counter of the bank |
| Crossed Cheques | A Crossed cheque is one which has Iwo Short Parallel lines which is marked across its face. It can be paid only to another banker. The major Advantage of crossing is that it reduces the danger of unauthorized persons getting possessions of a cheque and cashing it. |
| Bearer Cheque | Order Cheque |
| Marked Cheque | Not Payable or Bad Cheque |
| Antedated cheque | Post-dated Cheque |
| Stale cheque | Mutilated Cheque |
| Digital Cheque | Cheques in Electronics form and Truncated Cheques |
| Banker Cheque | Golden Cheque |
| Travelers Cheque | - |
These are some of the other Negotiable Instruments:-
Bill in Sets:- Foreign bills are generally drawn in a set of 3 each. To avoid miscarriage during transit, they are drawn in different parts and each part is transmitted separately and all these aspects, as a whole constitute a complete bill.
Accommodation Bill:-
They are drawn, accepted and Subsequently discounted from a bank for accommodation a friend and they are not real bills and hence, do not represent an acknowledgment of an actual debt.
Ambiguous Instruments:-
Under section 17, an Instrument, which is the form is such that it may either be treated by the holder as a bill or as a note, is an ambiguous instrument.
Inchoate Stamped Instruments:-
Under section 20, when one person gives to another such a document, the other person is Prima facie entitled to complete the document and make it into a proper negotiable instrument up to the value mentioned in the instrument or up to the value which is covered by the stamp affixed on it.
Inland and Foreign Bills:-
A Bill which is drawn or made in India and also made payable in India (or) drawn (Or) made in India upon any person resident in India, although it may be made payable in a foreign country is deemed to be an inland Bill.
Forged Instruments:-
In Forged instruments, there is a complete absence of title from the very beginning and forged Instruments in the eyes of law have no existence whatsoever and a forged signature is together inoperative.
