Negotiable instruments act 1881

If the drawee cannot, after reasonable search, be found, the bill is dishonoured. Explanation— An acceptance is qualified- a where it is conditional, declaring the payment to be dependent on the happening of an event therein stated; b where it undertakes the payment of part only of the sum order to be paid; c where no place of payment being specified on the order, it undertakes Negotiable instruments act 1881 payment at a specified place, and not otherwise or elsewhere; or where, a place of payment being specified in the order, it undertakes the payment at some other place and not otherwise or elsewhere; d where it undertakes the payment at a time other than that at which under the order or would be legally due.

Every promissory note or bill of exchange which is not expressed to be payable Negotiable instruments act 1881 demand, at sight or on presentment is at maturity on the third day after the day on which it is expressed to be payable. An authority to draw bills of exchange does not of itself import an authority to endorse.

In default of such presentment, no party thereto is liable thereon to the person making such default. Holder deriving Negotiable instruments act 1881 from holder in due course- A holder of a negotiable instrument who derives title from a holder in due course has the rights thereon of that holder in due course.

In default of such presentment, no party thereto is liable thereon to the person making such default. When the cause of Negotiable instruments act 1881 delay ceases to operate, presentment must be made within a reasonable time.

The instrument is at maturity on the third day after the 28th February, Acceptance and payment without protest- A drawee in case of need may accept and pay the bill of exchange without previous protest.

The bill not having been paid at maturity, the drawer sold the goods and retained the proceeds, but endorsed the bill to A. If the said parties carry on business or live in the same place, such notice is given within a reasonable time if it is dispatched in time to reach its destination on the date next after the day of dishonor.

The Negotiable Instruments Act, 1881

Who may negotiate- Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in section 50, indorse and negotiate the same.

Mode in which notice may be given- Notice of dishonour may be given to a duly authorized agent of the person to whom it is required to be given, or, where he has died, to his Negotiable instruments act 1881 representative, or, where he has been declared an insolvent, to his assignee; may be oral or written; may, if written, be sent by post; and may be in any form; but it must inform the party to whom it is given, either in express Negotiable instruments act 1881 or by reasonable intendment that the instrument has been dishonoured, and in what way, and that he will be held liable thereon; and it must be given within a reasonable time after dishonour, at the place of business or in case such party has no place of business at the residence of the party for whom it is intended.

Chapter XV Bills In Sets Set of bills Bills of exchange may be drawn in parts, each part being numbered and containing a provision that it shall continue payable only so long as the others remain unpaid.

When, notice of dishonor is unnecessary No notice of dishonor is necessary,- a when it is dispensed with by the party entitled thereto; b in order to charge the drawer, when he has countermanded payment; c when the party charged could not suffer damages for want of notice; d when the party entitled to notice cannot after due search be found; or the party bound to give notice is, for any other reason, unable without any fault of his own to give it; e to charge the drawers, when the acceptor is also a drawer; f in the case of a promissory note which is not negotiable; g when the party entitled to notice, knowing the facts, promises unconditionally to pay the amount due on the instrument.

Where the note, bill or cheque is lost or destroyed, its holder the person so entitled at the time of such loss or destruction. The provisions of this section are subject to those of sections 20, 49, 86 and Illustration The acceptor of a bill of exchange, when he accepted it, deposited with the drawer certain goods as a collateral security for the payment of the bill, with power to the drawer to sell the goods and apply the proceeds in discharge of the bill if it were not paid at maturity.

Section of the Act enjoins on the Court to presume that the holder of the cheque received it for the discharge of any debt or liability. Upon this endorsement he incurs no liability.

Partial failure of consideration not consisting of money Where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that party, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.

Payment of cheque crossed specially more than once. Dishonour of certain cheques for insufficiency of funds[ edit ] Provided that nothing contained in this section shall apply unless- a the cheque has been presented to the bank within a period of three months from the date on which it is drawn or within the period of its validity, whichever is earlier; b the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice in writing, to the drawer of the cheque within thirty days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and c the drawer of such cheque fails to make the payment of the said amount of money to the payee or as the case may be, to the holder in due course of the cheque within 15 days of the receipt of the said notice.

Liability of indorser- In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity, without, in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided.

Negotiable Instruments Act, 1881

Ambiguous instruments- Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either and the instrument shall be thence forward treated accordingly.

Section 13 - Negotiable Instruments [9] 1 Negotiable instrument. Exception I— No party for whose accommodation a negotiable instrument has been made, drawn, accepted or indorsed can, if he has paid the amount thereof, recover thereon such amount from any person who became a party to such instrument for his accommodation.

A can only recover Rs.

Commentaries on Negotiable Instrument Act 1881

Drawee in case of need Where amount is stated differently in figures and words If the amount undertaken or ordered to be paid is stated differently in figures and in words, the amount stated in words shall be the amount undertaken or ordered to be paid.

Payment in due course of crossed cheque Where the banker on whom a crossed cheque is drawn has paid the same in due course, the banker paying the cheque, and in case such cheque has come to the hands of the payee the drawer thereof, shall respectively be entitled to the same rights, and be placed in the same position in all respects, as they would respectively be entitled to and placed in if the amount of the cheque had been paid to and received by the true owner thereof.

Excuse for delay in presentment for acceptance or payment Delay in presentment 22[for acceptance or payment] is excused if the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence.

A promissory note, bill of exchange or cheque payable to order is negotiable by the holder by endorsement and delivery thereof. The bank fails before the cheque is presented.

Negotiable Instruments Act and Important Sections

Liability of acceptor for honour Such certificate is called a protest for better security. Presentment for payment of instrument payable after date or sight: Presentment for payment of promissory note payable by instalments: Presentment for payment of instrument payable at specified place and not elsewhere: Instrument payable at specified place: Presentment where no exclusive place specified: Essentially the liability of the parties to a ‘negotiable instrument’ has it statutory provisions under Sections 30, 32 and 35 of the Negotiable Instruments Act The first section in this aspect to be analyzed, would be S of the Act, which provides for the Liability of the drawer of the bill or a cheque.


The Negotiable Instruments Act,1881: Meaning & Types

26 OF [9th December, ] An Act to define and amend the law relating to Promissory Notes, Bills. rows · An Act to define the law relating to promissory notes, bills of exchange and cheques.

direct links for important headings the negotiable instruments act, chapter i – preliminarychapter ii – of notes, bills and chequeschapter iii – parties to notes, bills and chequeschapter iv – of negotiationchapter v – of presentmentchapter vi – of paymentcontinue reading.

Negotiable instruments recognized by Negotiable Instruments Act are: (i) Promissory notes (ii) Bills of exchange (iii) Cheques. A negotiable instrument is a piece of paper which entitles a person to a sum of money and which is transferable from one person to .

Negotiable instruments act 1881
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Negotiable Instruments Act, - Wikipedia