GROUP -3

Name Roll No.

Hardik Dodia. 11

Rosita Fernandes. 1213

14

Aparna Gawde. 15

A negotiable instrument is one which entitles a person to a sum of money and which can be transferred from one person to another either by mere delivery, or by endorsement & delivery

DEFINITION Section 13, “ a promissory note, bill of exchange or cheque payable either to order or bearer, whether the words “order “ or “bearer” appear on the instrument or not”

Free transferability.

Holder’s title free from defects.

Recovery.

Presumptions of sec 118 & 119:- Date, Time of acceptance, Time of transfer, Order of endorsement, Stamp, Holder in due course, Consideration, Proof.

By Statue:-

a. Promissory Note

b. Bills of exchange

c. Cheques

By Usage:-

a. Share Warrants

b. Dock Warrants

c. Bearer Bonds

d. Exchequer Bills

e. Dividend Warrants

f. Circular Notes

g. Bank Notes / Drafts

h. Debentures

i. Government Promissory Note

j. Railway Receipts.

Inland Instruments [Section 11]

A promissory note, bill of exchange or cheque payable is an inland instrument both the following two conditions are fulfilled:-

a. It must be drawn in India

b. It must be payable in India, or it must be drawn upon any person resident in India

E.g.:- “A bill drawn in Delhi on a merchant in Agra

and accepted payable in London”.

Foreign Instruments [Section 1]

An instrument which is not an inland instrument is deemed to be a foreign instrument.

E.g.:- “A bill drawn in Delhi on a merchant in London

and accepted payable in London”.

“A bill drawn in London on a merchant in Delhi

and accepted payable in Delhi”.

Trade BillA bill drawn and accepted for a genuine trade transaction is termed

as a trade bill. This is drawn by a seller on the buyers purchasing goods on credit.

Time Bill An instrument in which time for payment is mentioned. Any

promissory note, bills of exchange is a time instrument when it expresses to be payble

a. After a specified periodb. After sightc. On the happening of event which is certain to happen

E.g.:- “I promise to pay Mr. A Rs 500 after 3 months”. “I promise to pay Mr. A Rs 500 after sight”. “I promise to pay Mr. A Rs 500 after Mr. B’s

death’.Accommodation BillAn accommodation bill is a bill which is drawn, accepted without

consideration.E.g.:- “X needs funds, draws a bill on Y who

accepts it & gets it discounted with his banker & on due date remits the requisite amount to Y to enable him to meet the bill, such a bill is an

accommodation bill”.

Bill in Sets

A bill of exchange drawn in parts is called bill in sets.

Documentary Bill

A bill to which the documents of title of goods (i.e. Railway Receipts, Bill of Lading) and other documents are attached is called a documentary bill.

Clean Bill

A bill to which no documents relating to goods (for the transaction of which the bill is being drawn) is attached is called a clean bill.