Ni Act Essay

2796 WordsApr 17, 201312 Pages
Negotiable Instruments Act-1881 (Some important sections with amendments) Introduction: A negotiable instrument, according to the Negotiable Instrument Act-1881, means a promissory note, bill of exchange or cheque payable either to order or bearer. Judge Wellis defined a negotiable instrument as an instrument, the property of which is acquired by any one who takes it bonafide and for value notwithstanding any defect in the title of the person from whom he took it. Important features: The word "Negotiable" implies that not only the instrument is transferable by endorsement or delivery, but the holder in due course of the instrument, has received it bonafide, complete and regular on the face of it , for value and without any notice as to the effect in the title of its previous holder. The special characteristics of a negotiable instrument are as follows: It is transferable. The ownership of the instrument passes to the bonafide transferee for value, free from all claims, provided the instrument itself is valid (i.e free from forgery) notwithstanding any defect in the title of the transferor. A person taking a negotiable instrument in good faith and for value, is not affected by any defect in the title of the transferor , even if that transferor is a thief, unless he acquired the title by forgery, which confers no title. Some Important sections: SECTION-13: NEGOTIABLE INSTRUMENT A "negotiable instrument" means a promissory note, bill of exchange or cheque payable either to order or to bearer. SECTION-04: PROMISSORY NOTE A "promissory note" is an instrument in writing( not being a bank -note) 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.

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