Negotiable Instruments Ppt
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Transcript of Negotiable Instruments Ppt
![Page 1: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/1.jpg)
Negotiable Instruments
![Page 2: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/2.jpg)
Definition
• According to the section 13(1) of the Negotiable Instruments act of 1881-
A Negotiable instrument means a promissory note, Bill of exchange or
cheque payable either to order or to the bearer.
• Typically Negotiable instruments are written orders or unconditional promises to pay a fixed sum of money on demand or at a certain point of time. .
![Page 3: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/3.jpg)
Types of Negotiable Instruments
Promissory Note:
A promissory note is an instrument in writing containing an unconditional
undertaking signed by the maker to pay a certain sum of money only to a certain
person or the bearer of the instrument.
![Page 4: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/4.jpg)
Bill of Exchange:
A bill of exchange is an instrument in writing containing an unconditional order,
signed by the maker, directing a certain person to pay another person a certain
sum of money.
![Page 5: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/5.jpg)
Cheque:
A cheque is a bill of exchange on a specified banker and not expressed to be payable
otherwise than on demand.
![Page 6: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/6.jpg)
Hundi
• Hundies are the negotiable instrument written in vernacular language ,some
times these are even like promissory notes.
• It covers all indigenous negotiable instruments whether they be in the form of
notes or bills.
• The word hundi is derived from the Sanskrit word ‘hund’ which means to
collect.
![Page 7: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/7.jpg)
Basically Hundis refer to financial instruments evolved on the Indian sub-continent used in trade and credit transactions.
They were used -• as remittance instruments (to transfer
funds from one place to another), • as credit instruments (to borrow money
[IOUs]), • for trade transactions (as bills of exchange).
Though normally regarded as bills of exchange, they were more often used as equivalents of cheques issued by indigenous bankers.
![Page 8: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/8.jpg)
Parties to Negotiable Instruments Promissory Note• Maker• Payee• Holder• Endorser• Endorsee
Bill of Exchange• Drawer• Drawee• Acceptor• Payee• Holder• Endorser• Endorsee• Acceptor of Honour
Cheque• Drawer• Drawee• Payee• Holder• Endorser/Endorsee
![Page 9: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/9.jpg)
Distinction - I
Promissory Note Bill of Exchange
NaturePromise Order
PayeeMaker & Payee Drawer & Payee
Not Required Required
LiableMaker Drawer
NoticeNot Necessary Given to all Prior Parties
Payable to…Bearer Bearer on Demand
![Page 10: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/10.jpg)
Distinction - II
10
Bill of Exchange Cheque
DraweeAnyone Only Banker
AcceptanceNeeds Not Required
PaymentDemand - Time Demand
CrossingNever Crossed May be Crossed
StampProperly Stamp
Noting - ProtestingNeeded Not Needed
CountermandateNot Possible Possible
Notice of DishonourNecessary Necessary
Grace Days3 Days 0 Days
![Page 11: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/11.jpg)
Types of Cheques
There are two types of cheques
1). Open cheques-
A cheque is payable in cash across the counter of a bank is called an open cheque.
2). Crossed cheques-
A crossed cheque is one on which has two parallel lines or without the words ‘& co.
![Page 12: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/12.jpg)
1). General crossing
• Two transverse parallel lines are marked across its face
• It bears the words “not negotiable” between these parallel lines
2). Special crossing.
• Cheques crossed by two parallel lines with the Banker’s name written in
between.
• The banker to whom it is drawn shall pay only to the banker to whom it is
crossed or his agent.
3). Crossed “A/c Payee”
• It is also called restrictive crossing
• When the words “a/c payee” are written between the transverse parallel
lines , it means that the proceeds of the cheque are to be credited to the
account of the payee only.
Types of crossing
![Page 13: Negotiable Instruments Ppt](https://reader036.fdocuments.us/reader036/viewer/2022081416/5571fa7449795991699240dc/html5/thumbnails/13.jpg)