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    Legal Aspects of Business: Prepared by

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    Pougajendy Sadasivame
    The document discusses negotiable instruments and their key characteristics. It defines a negotiable instrument as a promissory note, bill of exchange, or cheque that is freely transferable, provides the holder with absolute title, specifies a certain sum that is payable on a certain date, and requires a signature. The three main types of negotiable instruments - promissory notes, bills of exchange, and cheques - are also described. Key parties to negotiable instruments and how liability is determined are summarized as well.

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    Legal Aspects of Business: Prepared by

    Uploaded by

    Pougajendy Sadasivame
    46 views14 pages
    The document discusses negotiable instruments and their key characteristics. It defines a negotiable instrument as a promissory note, bill of exchange, or cheque that is freely transferable, provides the holder with absolute title, specifies a certain sum that is payable on a certain date, and requires a signature. The three main types of negotiable instruments - promissory notes, bills of exchange, and cheques - are also described. Key parties to negotiable instruments and how liability is determined are summarized as well.

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    The document discusses negotiable instruments and their key characteristics. It defines a negotiable instrument as a promissory note, bill of exchange, or cheque that is freely transferable, provides the holder with absolute title, specifies a certain sum that is payable on a certain date, and requires a signature. The three main types of negotiable instruments - promissory notes, bills of exchange, and cheques - are also described. Key parties to negotiable instruments and how liability is determined are summarized as well.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    46 views14 pages

    Legal Aspects of Business: Prepared by

    Uploaded by

    Pougajendy Sadasivame
    The document discusses negotiable instruments and their key characteristics. It defines a negotiable instrument as a promissory note, bill of exchange, or cheque that is freely transferable, provides the holder with absolute title, specifies a certain sum that is payable on a certain date, and requires a signature. The three main types of negotiable instruments - promissory notes, bills of exchange, and cheques - are also described. Key parties to negotiable instruments and how liability is determined are summarized as well.

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    5/3/12

    LEGAL ASPECTS OF BUSINESS

    Click to edit Master subtitle style PREPARED BY S.POUGAJENDY,MBA,M.Phil,(Ph.D) SL/MBA/SREC

    NEGOTIABLE INSTRUMENTS A Negotiable instrument means


    promissory note, bill of exchange, or cheque, payable either to order or to bearer

    5/3/12

    Freely Transferable

    Absolute Title In Writing Unconditional Certain Sum

    Payee must be a certain Person Signature a must.


    Certain Time Delivery Essential

    Stamping is Mandatory.

    5/3/12

    TYPES OF NEGOTIABLE INSTRUMENTS


    In writing, signed, stamped Unconditional promise to pay Money only Certain party On demand or certain date Certain sum Parties Drawer, payee

    Pro

    5/3/12

    Bill of Exchange
    Writing, signed, accepted, stamped Unconditional order to pay Money only Certain party Certain sum Parties Drawer, Drawee & Payee

    5/3/12

    CHEQUES

    Writing, signed Unconditional order Issued by specified banker, certain payee On demand Certain amount Must bear a date

    5/3/12 Nature and requisites of negotiable instruments

    Be

    in writing Be signed by the maker or drawer Be an unconditional promise or order to pay State a fixed amount of money Not require any undertaking in addition to the payment of money Be payable on demand or at a definite time Be payable to order or to bearer

    5/3/12

    model

    Transfer by Assignment or Negotiation


    Transfer by Assignment
    The

    5/3/12

    Transfer by Negotiation
    The

    transfer of rights under a contract. It transfers the rights of the transferor (assignor) to the transferee (assignee).

    transfer of a negotiable instrument by a person other than the issuer. The person to whom the instrument is transferred

    LIABILITY OF PARTIES
    Makers

    5/3/12

    Liability (unconditional promise to pay) primarily liable on note Drawee Liability (order to pay) Acceptors Liability Primarily liable Drawers Liability secondarily liable

    Endorser's Liability Unqualified endorser secondarily liable Qualified endorsement No contract liability

    5/3/12

    Secondary liability
    Secondary

    liability refers to the responsibility of a person or entity that arises when the party directly liable fails to perform a duty. Secondary liability often targets two types of persons: 1) those who induce others to break the law, and 2) those who control others who break the law. drawers and indorsers are subject to secondary liability; and then, only if:

    Only

    5/3/12

    Holder and due course


    Holder defined (S. 8) holder of a promissory note, bill of exchange. or cheque means any person entitled his own name, to the possession thereof, and to receive or recover the amount due thereon from the parties thereto. Where the note, bill or cheque is lost or destroyed, its holder is the person so entitled at the time loss or destruction.
    The

    Holder in due course (S. 9) in due course means any person who for consideration, became the possessor of a promissory note, bill of exchange, or cheque, if payable to bearer, or the payee or endorsee thereof, if payable to order, before the amount mentioned if it became payable, and without having sufficient cause to believe that any defect existed in the title of the person from whom he derived his title.
    Holder

    5/3/12 REQUISITES FOR HOLDER IN DUE COURSE

    1.

    He must show that he has paid consideration. Any

    valuable

    consideration which would support an ordinary contract would be sufficient to constitute the transferee a holder in due course,
    2

    .But the donee of a pro-note, who

    takes it by way of a gift, is not a holder

    5/3/12 REQUISITES FOR HOLDER IN DUE COURSE (ctd)

    3.

    He must prove that he became possessor due thereof under the before the instrument

    the

    amount
    4.

    became actually payable. He must also show that he became the possessor thereof without having sufficient cause to believe that any defect existed in the title of the

    Discharge of parties

    5/3/12

    Discharge of instrument and discharge of parties from liability is not same. Parties may be discharged from liability on a negotiable instrument in any of the following ways: 1. By payment 2. By cancellation 3. By release 4. By default of the holder 5. By material alteration 6. By holder destroying indorser remedy 7. Draft indorsed by payee 8. Discharge of drawee of cheque 9. By operation of law
    14

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