Q.1: Define Negotiable instruments & states their characteristics &assumption. Ans. Nego. Inst.: the term Nego.

Ins. literately means a written document which create a right in favor of some person & which is freely transferable. In the words of Justice Willis a Nego. Inst. is one the property in which is acquired by any one who takes it bora fide and for value notwithstanding and defect in the title of the person from whom he look it. According to section 13 of Nego. Ins. Act a Nego. Ins. means a promissory notes, bill of exchange of cheque, payable either to order or to bearer whether the words order or bearer appear on the instrument or not. Characteristics: -- 1) Negotiability: The property is a negotiable instrument is freely transferable. In case of order instrument it is transferable by endorsement and delivery. 2) Title: the holder in due course is not in any way affected by the defective title of the transferor or any party. Holder in due course means a holder who has accepted a Nego. Ins. For value, good faith and before maturity. 3) Recovery: The folder in due course is entitled to sue on the instrument in his own name. He need not give any notice to transfer to the person liable for payment on the instrument 4) Presumptions: A Nego. Ins is always subject to certain presumption. They will be applicable unless contrary is proved. Assumption: Following legal assumption are:- 1) That very Nego Ins. are drawn, accepted & endorsed made or transferred for consideration. 2) That the date is bears is the date on which it was made. 3) That every transaction was made before maturity. 4) That the lost instruments was duly signed and sampled.5) That it was accepted within a reasonable time after being made and being maturity. 6) That the endorsements were made in the same order in which appear. 7) That is a suit upon a dishonored instrument, the court shall on proof of the protest, presume that it was dishonored until this fact is disproved. Q.4) Define 1> A payment in due course 2> Negotiation 3> At Sight. Ans. 1)A payment in due Date: Payment, in accordance with the apparent of the instrument in good faith and without negligence to any person in possession thereof under circumstance which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount paid. 2) Negotiation: The term Nego. Means transfer on an instrument from one person to another person. So as to constitute that

person the holder of the Inst. 3) At sight: the word at sight means on demand, yet according to the limitation Act 1963, a bill payable at sight is regarded as different from a bill payable on demand. 4) After sight: a promissory note after presentment for sight and in a bill of exchange after acceptance. 5) Escrow: A bill, endorsed or delivered to a person subject to the understanding that will be paid only if certain condition are fulfilled is called an Escrow. 6) Acceptance : It is only a bill that can be presented for acceptance. Bills payable on demand and those payable on fixed data. 7) Noting and Protesting: Noting is the authentic and official proof of presentment and dishonor of a Nego. Ins. Protesting is a formed certificate of dishonored issued by the notary public to holder of a bill or note on his demand. 8) Bank draft: Bank Draft is drawn by one branch of a bank on another branch of the same bank. Instructing the letter to pay a specified sum of money to a name payee or to his order. 9)On presentment: Q.2) define cheque, promissory note, bill of exchange. Distinguish bet. Cheque & prom.Note Ans. a>Cheque: Section 6 define a cheque as bill of exchange drawn on a specified banking and note expressed to be payable otherwise than on demand. b>Bill of exchange: Sec. 5 of the Nego. Ins. Act define bill of exchange as An Ins. In writing condition 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 instruments. c>Promissory note: Sec 4 or the Act define a promissory note as an ins. in writing not being a bank or currency note containing an unconditional undertaking, signed by the maker to pay a certain sum of money only to or to the order of , certain person or to the bearer of the ins.

Difference between P. N. and B. of Ex.: Contents 1. Number of parties 2. Promise & order Bill of Exchange 1. There r 3 Prom. Note parties: 1. There r 2 parties: maker

drawer, drawer & payee. & payee. 2. A bill must at least 2. A prom.note contains a imply that the drawer as a promise & an undertaking right to ask the drawee to & not an order to pay. pay. 3. Bill payable after sight Prom note does not require requires acceptance of the any acceptance before it is drawee before it is presented for payment. presented for payment. 4The liability of a maker 4.A drawer of a bill of of a note is primary and exchange is secondary and absolute. conditional 5. In a promissory note 5. Maker maker stands in an immediate immediate

3. Acceptance

4. Nature of liability

5.Makers position

stands

in

relationship

relationship with acceptor and not the

6.

with acceptor. payable. 6.Maker cannot be the 6.The drawer and drawer r payee the same person.

Diff. bet Bill of exchange & Cheque: Bill of Exchange Cheque

1. A bill of exchange is usually drawn on 1.A cheque is always drawn on a bank. some person or firm. 2.It may be used for both intend and 2. A cheque is generally used for inland foreign pay. payment. 3.Bill of ex. Maybe payable on demand or 3. A cheque is always payable on demand. expiry of fixed period. 4. It must properly stamped. 4. Does not require any stamp. 5. It must be accepted before its payment 5. A cheque does not require any can be claimed. 6.B.of ex. Can not be crossed. 7. Intended for circulation. acceptance. 6.A cheque cannot be crossed. 7. Cheque are not usually intended for

circulation but for immediate payment. 8. A bill payable on demand can never be 8. A cheque drawn payable to bearer on drawn payable to bearer. demand shall be valid. 9. Three days of grace r allowed from the 9. A cheque is payable immediately on due date. demand without any days of grace.