NEGOTIABLE

INSTRUMENTS
 NEGOTIABLE
INSTRUMENTS
• Negotiable: It means capable of being legally
transferred from one to another either by delivery
or endorsement.
• Instrument: A legal document.
• A negotiable instrument is a document which
entitles a person to a sum of money and which is
transferable from one person to another by mere
delivery or by endorsement and delivery. The law
relating to negotiable instruments is contained in
the Negotiable Instruments Act 1881, which deals
with promissory notes, bills of exchange and
cheques.
 CHARACTERISTICS
1. Freely transferable: The property in a negotiable
instrument passes from one person to another by
delivery, if the instrument is payable to bearer, and by
endorsement and delivery if it is payable to order.
2.Title of the holder free from all defects: A person taking
an instrument bona-fide and for value, known as holder
in due course gets the instrument free from all defects
in the title of the transferor. He is not in any way
affected by any defect in the title of the transferor or
any other person.
• 3.Recovery: The holder in due course can sue upon a
negotiable instrument in his own name for the recovery
of the amount. Further he need not give notice of transfer
to the party liable on the instrument to pay.
• 4.Presumptions: Certain presumptions apply to all
negotiable instruments, unless contrary proved:
– Consideration: Every negotiable instrument is
presumed to have been made, drawn, endorsed,
negotiated or transferred, for consideration.
– Date: Every negotiable instrument
bearing a date is presumed to have
been made or drawn on such date
– Time of acceptance: When a bill of
exchange has been accepted, it is
presumed that it was accepted
within reasonable time its date and
before its maturity.
– Time of transfer: Every transfer of a negotiable instrument
is presumed to have been made before its maturity.
– Order of endorsements : The endorsements appearing upon
a negotiable instrument are presumed to have been made
in the order in which they appear thereon.
– Stamp: When an instrument has been lost, it is presumed
that it was duly stamped
• Holder presumed to be holder in due
course: Every holder of a negotiable
instrument is presumed to be a holder
in due course.
• Proof of protest: In a suit upon an
instrument that is dishonoured, the
Court, on proof of the protest,
presumes the fact of dishonour, until
such fact is disproved.
THANK YOU