Where the consideration for a signature consisted of money and was originally absent in part or has subsequently failed in part, the sum a holder in immediate relation with the signer can receive is proportionally reduced (s.44). The same applies where part of the consideration, though not money...
Read Complete Guide →Section 1 names the Act The Negotiable Instruments Act, 1881, extends it to the whole of India and brings it into force on the first day of March, 1882. It leaves untouched section 21 of the Indian Paper Currency Act, 1871 and any local usage relating to an instrument in an oriental language...
A promissory note is an instrument in writing that contains an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer. A bank-note or a currency-note is expressly not a promissory note. Of the eight illustrations...
A bill of exchange is an instrument in writing with an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or the bearer. Three clarifications follow: a certain-to-happen event does not make payment...
A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. The term includes the electronic image of a truncated cheque and a cheque in the electronic form. A truncated cheque is one truncated during a clearing cycle, and "clearing house"...
The maker of a bill or cheque is the drawer; the person directed to pay is the drawee. A person named as a fallback is a drawee in case of need. A drawee who has signed assent on the bill and delivered it, or given notice of signing, becomes the acceptor. Someone who accepts a noted or protested...
A holder is a person entitled in his own name to possession and to receive or recover the amount. A holder in due course is a person who for consideration became possessor (if bearer) or payee or indorsee (if order) before the amount became payable and without sufficient cause to believe a defect...
An instrument is inland if it is drawn or made in India and is made payable in, or drawn upon any person resident in, India. Section 12 says any such instrument not so drawn, made or made payable is foreign. The test turns on place of drawing or making, place of payment and residence of the drawee...
A negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. It is payable to order if expressed so, or payable to a particular person without words prohibiting transfer. It is payable to bearer if expressed so, or if the only or last indorsement is...
An instrument is negotiated when it is transferred so as to make the transferee the holder. A maker or holder who signs it, otherwise than as maker, for the purpose of negotiation indorses it and is the indorser. If the indorser signs his name only, the indorsement is in blank; if he adds a...
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