Wednesday 3 October 2012

What is negotiable instrument? Define the characteristics so kinds of negotiable instrument?




Negotiable instrument:

It is a written document, money. A negotiable instrument is transferable to the another person. Under the negotiable instrument act 1881. 

 “Characteristics”

Negotiable Instrument have following features.

1.                 Transferable by delivery:

negotiable instrument is transferable from one person to another by delivery or by endorsement and delivery.

2.                 Entitled to receive money:

The legal person of the instrument is entitled to receive money mentioned in it.

3.                 Filing a sue:

The holder of a negotiable instrument has the right to document a sue in his name for payment from all or any of the concerned parties.

4.                 Transferee is  not affected by defective title:

If the transferee must has accepted the negotiable instrument in good faith, then he is not affected by the defective title of the transfer in any way.

   “Kinds of negotiable instruments”


There are three kinds of negotiable instruments.

1.                 Promissory note:

A promissory note is the simple and earliest kind of credit instrument. there is no  conditional written promise by one person to another in which the maker promise to pay an demand or at a fixed or determinable date in the future, a stated sum of money pad to or to the order of a.

2.                 Bill of exchange:

It is a written document drawn by the seller on the buyer to pay certain amount of money on due date.

3.                 Cheque:

A cheque may be defined as, “a written order of a depositer upon a bank to pay to or to the order of a designated party or a bearer, a specified sum of money on demand”.

1 comments:

  1. Most Common types of negotiable instruments are;
    - Promissory notes.
    - Bill of exchange.
    - Check.
    - Government promissory notes.
    - Delivery orders.
    - Customs Receipts.

    Most negotiable instruments fall under the following two categories; the Negotiable instrument by statute and Negotiable instruments by custom or usages.

    ReplyDelete

 

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