Negotiable Instruments Act, 1881 | Business Law - B Com PDF Download

 Page 1


Presented By:
Anish Tulshyan     12810009
Nishita Singh 12810058
Rahul Paul 12810064
Shailendra Gautam 12810075
Sharad Srivastava 12810078
Page 2


Presented By:
Anish Tulshyan     12810009
Nishita Singh 12810058
Rahul Paul 12810064
Shailendra Gautam 12810075
Sharad Srivastava 12810078
? The law relating to negotiable instruments is contained in the
Negotiable Instruments Act, 1881 which applies and extends to
the whole of India.
Page 3


Presented By:
Anish Tulshyan     12810009
Nishita Singh 12810058
Rahul Paul 12810064
Shailendra Gautam 12810075
Sharad Srivastava 12810078
? The law relating to negotiable instruments is contained in the
Negotiable Instruments Act, 1881 which applies and extends to
the whole of India.
Definition:
The word negotiable means ‘transferable by delivery,’ and the
word instrument means ‘a written document by which a right
is created in favour of some person.’
Thus, the term “negotiable instrument” literally means ‘a
written document which creates a right in favour of somebody
and is freely transferable by delivery.’
A negotiable instrument is a piece of paper which entitles a
person to a certain sum of money and which is transferable
from one to another person by a delivery or by endorsement
and delivery.
Page 4


Presented By:
Anish Tulshyan     12810009
Nishita Singh 12810058
Rahul Paul 12810064
Shailendra Gautam 12810075
Sharad Srivastava 12810078
? The law relating to negotiable instruments is contained in the
Negotiable Instruments Act, 1881 which applies and extends to
the whole of India.
Definition:
The word negotiable means ‘transferable by delivery,’ and the
word instrument means ‘a written document by which a right
is created in favour of some person.’
Thus, the term “negotiable instrument” literally means ‘a
written document which creates a right in favour of somebody
and is freely transferable by delivery.’
A negotiable instrument is a piece of paper which entitles a
person to a certain sum of money and which is transferable
from one to another person by a delivery or by endorsement
and delivery.
Free transferability or easy negotiability
•Negotiable instrument is freely transferable from one
person to another without any formality.
•The property (right of ownership) in these instruments
passes by either endorsement and delivery (in case it is
payable to order) or by delivery merely (in case it is
payable to bearer) and no further evidence of transfer is
needed.
Title of holder is free from all defects
•A person who takes negotiable instrument bona-fide and
for value gets the instrument free from all defects in the
title. The holder in due course is not affected by defective
title of the transferor or of any other party.
Page 5


Presented By:
Anish Tulshyan     12810009
Nishita Singh 12810058
Rahul Paul 12810064
Shailendra Gautam 12810075
Sharad Srivastava 12810078
? The law relating to negotiable instruments is contained in the
Negotiable Instruments Act, 1881 which applies and extends to
the whole of India.
Definition:
The word negotiable means ‘transferable by delivery,’ and the
word instrument means ‘a written document by which a right
is created in favour of some person.’
Thus, the term “negotiable instrument” literally means ‘a
written document which creates a right in favour of somebody
and is freely transferable by delivery.’
A negotiable instrument is a piece of paper which entitles a
person to a certain sum of money and which is transferable
from one to another person by a delivery or by endorsement
and delivery.
Free transferability or easy negotiability
•Negotiable instrument is freely transferable from one
person to another without any formality.
•The property (right of ownership) in these instruments
passes by either endorsement and delivery (in case it is
payable to order) or by delivery merely (in case it is
payable to bearer) and no further evidence of transfer is
needed.
Title of holder is free from all defects
•A person who takes negotiable instrument bona-fide and
for value gets the instrument free from all defects in the
title. The holder in due course is not affected by defective
title of the transferor or of any other party.
3. Transferee can sue in his own name without giving notice to the 
debtor:
• A bill, note or a cheque represents a debt, i.e., an “actionable
claim” and implies the right of the creditor to recover something
from hid debtor
• The creditor can either recover this amount himself or can
transfer his right to another person
• In case he transfers his right, the transferee of a negotiable
instrument is entitled to sue on the instrument in his own name
in case of dishonor, without giving notice to the debtor of the
fact that he has become holder
• In case of transfer or assignment of an ordinary “actionable
claim” (i.e., a book debt evidenced by an entry by the creditor in
his account book, under the transfer of property act, notice to
the debtor is necessary in order to make the transferee entitled
to sue in his own name