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CORPORATE LAW

Submitted To
Brig Mr. Muhammad Saleem
Submitted By
Arjmand bano
Fa14-MBA-26
MBA 7th Semester
Department Of Business Management
Lahore Garrison University
Inland and Foreign Instruments:
Instruments may be inland or foreign.
(a) Inland instrument (Sec. 11). A promissory note, bill of exchange or cheque drawn or made
in India and made payable in or drawn upon any person resident of India shall be deemed to
be an inland instrument.
Thus, an instrument will be an inland instrument if it is (i) made or drawn in India and
payable in India, or (ii) drawn upon a person resident of India, although payment is to be
made outside India.
If we analyse the above rules, we come to the following conclusion:
(b) Foreign instrument (Sec. 12) An instrument which is not an inland instrument is a foreign
instrument:
(i) A promissory note made in India but payable outside India.
(ii) A promissory note made outside India and payable outside India and accepted payable
outside India.
(iii) A bill drawn in India on a person who is residing outside India and accepted payable
outside India.
(iv) A bill drawn outside India made payable in India or outside India.
(v) A bill drawn outside India on a person who is residing outside India.
Examples:
(a) A writes a promissory note in India in favour of B of London, which is payable in
London.
A writes a promissory note in London payable in London.
A draws a bill in Delhi on B of London and accepted payable in London.
A draws a bill in London and it is accepted payable in Delhi. If the above bill is accepted
payable in London, even then it is a foreign bill.
A draws a bill in London on B, a resident of Paris.

Endorsement:
Endorsement has different meanings, but in the law of negotiable instruments such as checks
and securities, it is the act of the owner or payee signing his/her name to the back of a check,
bill of exchange or other negotiable instrument so as to make it payable to another or
cashable by any person. It is also sometimes referred to as "endorsement". An
accommodation endorsement is the guarantee given by one person (or legal entity) to induce
a bank or other lender to grant a loan to a different person (or legal entity). It is also the
banking practice whereby one bank endorses the acceptances of another bank, for a fee,
making them appropriate for purchase in the acceptance market.
The following is an example of a state statute dealing with endorsement:
(A) An endorsement may be in blank or special. An endorsement in blank includes an
endorsement to bearer. A special endorsement specifies to whom a security is to be
transferred or who has power to transfer it. A holder may convert a blank endorsement to a
special endorsement.
(b) An endorsement purporting to be only of part of a security certificate representing units
intended by the issuer to be separately transferable is effective to the extent of the
endorsement.

Ambiguous Instruments:
Where the instrument is written in such a manner that it can be treated as a bill or a note, it is
called an ambiguous instrument. Where an instrument may be construed either as a
promissory note or a bill of exchange, the holder may at his option treat it as a bill or a note
and the instrument thereafter shall be treated accordingly (Sec. 17).
The Negotiable Instrument Act, 1881 does not give the cases in which such a situation may
arise. However, Sec. 5 (2) of the English Bills of Exchange Act, 1882 lays down that where
sec. 5 (2) of the drawer and the drawee are the same persons or where the drawer is a
fictitious person or a person not having the capacity to contract, the holder may treat the
instrument at this option either as a bill or note.
Example:
A draws a bill on B. The bill is endorsed to C.B. is a fictitious person. Although it is a bill but
C can treat it as a note because B is a fictitious person, As such A is liable to pay money to C.
It should be noted that the terminology used is not important, see above example. Again the
option to treat the instrument as a bill or note is to be exercised once for all. No change later
on is allowed. If the amount in the instrument differs in figures and words, the amount stated
in words shall be the amount payable (Sec. 18).

NEGOTIATION
The deliberation which takes place between the parties touching a proposed agreement.

That which transpires in the negotiation makes no part of the agreement, unless introduced
into it. It is a general rule that no evidence can be given to add, diminish, contradict or alter a
written instrument.

Merc. Law. The act by which a bill of exchange or promissory note is put into circulation by
being passed by one of the original parties to another person. Until an accommodation bill or
note has been negotiated, there is no contract which can be enforced on the note: the contract,
either expresses or implied that the party accommodated will indemnify the other, is, till then,
conditional.