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Notes on Negotiable Instrument Act

  • Date Submitted: 11/22/2013 08:38 PM
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Dr. Ambedkar Institute of Management Studies & Research, Deeksha Bhoomi, Nagpur

NEGOTIABLE INSTRUMENTS ACT, 1881
:Key Terms:
Negotiable instrument: A negotiable instrument is one, the property and the title in which is acquired by anyone who takes it as bonafide and for value notwithstanding any defect in the title of the person from whom he/she took it. Promissory note: A promissory note is an instrument in writing (not being a bank note or currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to, or to the order of a certain person. Bills of exchange: 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. Accommodation bills: Those bills, which are drawn without any actual consideration, merely, to help out friends and relatives are known as accommodation bills. Banker’s draft: It is a bill of exchange in which a bank orders its branch or another bank, as the case may be, to pay a specified amount to a specified person or to the order of the specified person. Cheque: Cheque is a kind of bill of exchange, which is always drawn upon a specific bank and is payable on demand. Crossing of a cheque: When two angular parallel lines are drawn on the face of the cheque, then the cheque said to be crossed. Usances: The time fixed by the custom of countries for payment of bills drawn in one country but are payable in another country is known as a usance. Payment in due course: Payment in due course means payment of the instrument after the expiry of the duration of the instrument, in good faith and without any negligence, to the possessor thereof and without the existence of any circumstances that may lead one to believe that the person receiving the payment is not entitled to it. Assignment: Assignment of any object means the transfer...

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