negotiable instruments b.law presentation

7/31/2019 negotiable instruments b.law presentation

1/17

PRESENTED TO:

NAUMAN QAISER

BY:

AMMARA SALEEMBILAWAL SHABBIRAHMED RAZAZEERAK BATOOL


2/17

A negotiable instrument is a document guaranteeingthe payment of a specific amount of money, either ondemand, or at a set time. Negotiable instruments are

often defined in legislation. A negotiable instrumentmeans a promissory note, bill of exchange or chequepayable either to order or to bearer.

NEGOCIABLE INSTRUMENTS


3/17

More specifically, it is a document contemplated by a contract, (1)warrants the payment of money, the promise of or order forconveyance of which is unconditional;

(2) specifies or describes the payee, who is designated on andmemorialized by the instrument; and

(3) is capable of change through transfer by valid negotiation of the

instrument

As a negotiable instrument is a promise of a payment of money, theinstrument itself can be used by the holder in due course as a store ofvalue; although, instruments can be transferred for amounts in

contractual exchange that are less than the instruments face value(known as discounting)


4/17

Freely transferableAbsolute title

In writing

Unconditional

Certain sum

Payee must be a certain person

Signature a must

Certain timeDelivery essential

Stamping is mandatory


5/17

Freely transferableAbsolute title

In writing

Unconditional

Certain sum

Payee must be a certain person

Signature a must

Certain timeDelivery essential

Stamping is mandatory

essentials


6/17

A promissory note is a negotiable instrument, whereinone party (the makeror issuer) makes an unconditionalpromise in writing to pay a determinate sum of money tothe other (thepayee), either at a fixed or determinablefuture time or on demand of the payee, under specificterms.

Bank note is frequently referred to as a promissory note:a promissory note made by a bank and payable to bearer

on demand

Promissory note:


7/17

In writing, signed, stamped

Unconditional promise to pay

Money only

Certain party

On demand or certain date

Certain sum

Parties : drawer, payee

ESSENTIALS OF PROMISSORY NOTE:


8/17


9/17

An unconditional order issued by a person or businesswhich directs the recipient to pay a fixed sum ofmoney to a third party at a future date. The future datemay be either fixed or negotiable. A bill of exchangemust be in writing and signed and dated also calleddraft.

A bill of exchange may be endorsed by the payee infavor of a third party, who may in turn endorse it to afourth, and so on indefinitely. The "holder in duecourse" may claim the amount of the bill against thedrawee and all previous endorsers, regardless of anycounterclaims that may have disabled the previous

payee or endorser from doing so. This is what is meantby saying that a bill is negotiable.

Bill of exchange


10/17

A bill of exchange or "draft" is a written order by the drawerto the drawee to pay money to thepayee.

A common type of bill of exchange is the cheque ,defined asa bill of exchange drawn on a banker and payable on

demand.Bills of exchange are used primarily in international trade,and are written orders by one person to his bank to pay thebearer a specific sum on a specific date. Prior to the advent

of paper currency, bills of exchange were a common meansof exchange. They are not used as often today


11/17

Writing, signed, stamped, accepted.Unconditional order to pay

Money only

Certain party

Certain sum

parties: drawer, drawee, payee

essentials


12/17


13/17

A cheque is a documentthat orders a payment of money froma bank account. The person writing the cheque, the drawer,usually has a current account where their money waspreviously deposited. The drawer writes the various detailsincluding the monetary amount, date, and a payee on thecheque, and signs it, ordering their bank, known as thedrawee, to pay that person or company the amount of moneystated

cheque


14/17

Cheques are a type of bill of exchange and were developed as a way tomake payments without the need to carry large amounts of money.While paper money evolved from promissory notes, another form ofnegotiable instrument, similar to cheques in that they were originally awritten order to pay the given amount to whoever had it in theirpossession (the "bearer").

The four main items on a cheque are

Drawer, the person or entity who makes the cheque

Payee, the recipient of the money

Drawee, the bank or other financial institution where the cheque canbe presented for payment

Amount, the currency amount


15/17

Writing, signedUnconditional order

Issued by specified banker, certain payee

On demand

Certain amount

Must bear a date

Essentials of cheque


16/17

Types of chequesThe cheques are of two types. (i) Open cheques and (ii) crossed cheques.

(i) Open Cheques. Open cheques are those cheques which are paid acrossthe counter of the bank. Open cheques may be bearer or order cheques.

(a) Bearer cheques. If a drawer orders the bank to pay a stated sum of

money to the bearer it is called a bearer cheque. Any person who lawfullypossesses a beaker cheque is entitled to receive payment of that cheque.

(b) Order cheque. If a cheque is to the order of a person in whose favor thecheque is drawn it is called order cheque. The order cheque is paid by thebank only when the bank is satisfied about the identity of the payee.

(ii) Crossed Cheques. If a cheque is crossed by drawing two parallel linesacross the face of the cheque, with or without the words & Co or A/c payeeonly, it is called a crossed cheques. The crossed cheque cannot be paid onthe counter of the drawee bank. It will be deposited in the account of a personin whose order or favor it is drawn.

Types of cheque


17/17

THANK YOU

Documents

negotiable instruments b.law presentation