Negotiable instrument act

Meaning:

Negotiable : Transferable by delivery.

Instrument : A legal written document.

Definition sec 13(1) :

“A negotiable instrument means a promisory note,bill of
exchange or cheque payable either to order or bearer.
 Types and Characteristics of
negotiable instrument.
1) A bill of exchange.
2) A promissory note.
3) A cheque .
Characteristics :
1) Written
2) Transferable
3) Unconditional promise
4) Certain amount
5) Transferee can sue in his name
6) Payable in money
7) Rights of the holder
 Promissory note:
Definition u/s 4 :
“A promissory note is an instrument in writing containing an
unconditional undertaking, signed by the maker to pay on demand or at a
fixed or determinable future time a certain sum of money only to or to the
order of a certain person or to the bearer of the instrument”
Essentials of a promissory note :
1) written
2) Must contain promise to pay
3) Unconditional promise
4) Signature of maker
5) Maker must b a certain person
6) The payee must be certain
7) Ammount must be certain
8) Legal formalities
Legal formalities must include court fee accordingly.

4
• Bill of Exchange u/s 5 :
“ A bill of exchange is an instrument in writing
containing an unconditional order, signed by the
maker, directing a certain person to pay on demand
or at a fixed or determinable future time a certain
sum of money only to or the order of a certain
person or the bearer of the instrument”
Essentials :
1) Written
2) Unconditional order
3) Signed by the drawer
4) The drawee must be certain
5) Payee must be certain
6) Sum payable must be certain
7) Pak currency 5
8) Legal formalities
• Distinction b/w promissory note and bill of
exchange:

1) Number of parties
2) Promise and order
3) Position of maker
4) As to liability
5) As to notice of dishonor

Conclusion.
6