TITLE I

NEGOTIABLE INSTRUMENT IN GENERAL

CHAPTER I

FORM AND INTERPRETATION

Section 1.

An instrument to be negotiable must conform to the following requirements:

a) It must be in writing and signed by the maker or drawer;

b) Must contain an unconditional promise to pay a sum certain in money;

c) Must be payable on demand, or at a fixed or at a determinable future time;

d) It must be payable to order or to bearer; and

e) Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with
reasonable certainty.

 Section 1 refers to the definition of negotiable instrument. If the instrument does not conform with the above
requirements it is not negotiable. Once an instrument is not negotiable from the start, it stays non-negotiable.

 Negotiability of the instrument must be determinable from what appears on its face alone and not elsewhere

Section 2.

The sum payable is a sum certain within the meaning of this Act, although it is paid -

a) With interest;

b) By stated installments; or

c) By stated installments, with a provision that upon default in payment of any interest or installment the
whole shall become due; or

d) With exchange, whether at a fixed rate or at the current rate; or

e) With collection costs or an attorney’s fee in case payment shall not be made at maturity

 “Sum certain” means if you can compute the amount on due date or maturity date.

 “Stated installments” requires that

1. The interest of each installment, and

2. The due date of each installment must be fixed in the instrument

 Provisions that “upon default in payment of any interest or installment the whole shall become due” are know as
acceleration clause

Section 3.

An unqualified order or promise to pay is unconditional within the meaning of this Act. Though it is couple
with -
 a) An indication of a particular fund out of which reimbursement is to be made, or a particular account to
be debited with the amount; or

b) A statement of transaction which gives rise to the instrument.

But an order or promise to pay out of a particular fund is not unconditional.

 “Unqualified order” means duty to pay

 “Reimbursement” in (a) is not conditional e.g. “and reimburse the same from my account”

 “Statement of transaction” in (b) e.g. “as payment for the mechandise ordered”

 Last sentence in Section 3 is the exception becomes conditional when the payment itself and not the
reimbursement comes from a particular fund.

Section 4.

An instrument is payable at a determinable future time within the meaning of this Act, which is expressed to be
payable when -

a) At a fixed period after date or sight; or

b) On or before a fixed or determinable future time specified therein; or

c) On or at fixed period after the occurrence of a specified event, though the time of happening be
uncertain

An instrument payable upon contingency is not negotiable and the happening of the event does not cure its
defect.

 Future date specified is a fixed time

 Fixed period after date may refer date of maturity by counting a period (i.e. days, weeks, month) from the date of
issuance

 “After sight” means instrument is seen by the drawee upon presentment from acceptance or accepted by the
drawee

 In (c), a bill or note payable before the occurrence of a specified event is not negotiable, since the date of maturity
of the instrument can only be ascertained after it as become overdue and, therefore, the time for payment is
uncertain.

 Contingency is, in law, an uncertain future event which may or may not happen.

Section 5.

Section 14.

Where the instrument is wanting in any material particular,

the person in possession thereof

has the prima facie authority to complete it

by filling up the blanks therein.

And a signature on a blank paper

delivered by the person making the signature

in order that the paper may be converted into a negotiable instrument

operates as a prima facie authority to fill it up as such for any amount.