ASSIGNMENT

BUSSINESS LAW

SUBMITTED-TO SUBMITTED-BY

MS. PRIYANKA SHARMA JITENDRA KUMAR MAHESHWARI

DEPT.-M.B.A M.B.A IInd YEAR IIIrd SEM

BHAGWANT UNIVERSITY

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Q -1- Discuss in detail characteristics & Negotiable its kinds?
INTRODUCTION

The Negotiable Instruments Act was passed in 1881. Some provisions of the Act have become
redundant due to passage of time, change in methods of doing business and technology changes.
However, the basic principles of the Act are still valid and the Act has stood test of time. The Act
extends to the whole of India. There is no doubt that the Act is to regulate commercial
transactions and was drafted to suit requirements of business conditions then prevailing.
The instrument is mainly an instrument of credit readily convertible into money and easily
passable from one hand to another hand.

DEFINITION

“A transferable, signed document that promises to pay the bearer a sum of money at a future date
or on demand” Examples include checks, bills of exchange, and promissory notes.

CHARACTERISTIC OF A NEGOTIABLE INSTRUMENT

A negotiable instrument has the following characteristics:

1} PROPERTY: The possessor of the instrument is the holder and owner thereof. A negotiable
instrument does not merely give possession of the instrument, but right to property. Whosever
gets possession of the instrument becomes its owner and is entitled to the sum mentioned therein
as the holder. It passes by mere delivery where instrument is payable to ‘bearer.’2} DEFECTS
IN TITLE: The holder in good faith and for value called the ‘holder in due course’ gets the
instrument free from all defects of any previous holder.

3} REMEDY: The holder can sue upon the negotiable instrument in his own name. All prior
parties are liable to him. A holder in due course can recover the full amount of the instrument.4}
RIGHT: The holder in due course is not affected by certain defenses which might be available
against previous holder, for example, fraud, to which he is not a party.

5} PAYABLE TO ORDER: All three negotiable instruments are payable to order which is
expressed to a particular person. An instrument which does not restrict its transferability
expressly is negotiable whether the word ‘order’ is mentioned or not. The word ‘order’ or
‘bearer’ is no longer necessary to render an instrument negotiable
It must be noted that all the three negotiable instrument is endorsed and is expressed to be

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payable to the order of a specified person, it is nevertheless payable to him or his order.

6} PAYABLE TO BEARER: the three negotiable instrument is expressed to be payable or on

which the only or last endorsement is an endorsement in blank. It specifies that the person in
possession of the bill is a bearer of the instrument which is so expressed payable to bearer.

7} PAYMENT: A negotiable instrument may be made payable to two or more payees, or it may
be payable in alternative to one or two payees.

8} CONSIDERATION: Consideration in the case of a negotiable instrument is presumed.

9} PRESUMPTIONS: Certain presumptions apply to all negotiable instruments.

TYPES OF NEGOTIABLE INSTRUMENTS:

A negotiable instrument regulates only three types, viz,

1} PROMISSORY NOTES.

2} BILLS OF EXCHANGE.

3} CHEQUES.

PROMISSORYNOTESDEFINATION

“A PROMISORY NOTE IS ANINSTRUMENT IN WRITING CONTAINING 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 OF THE INSTRUMENT.THE PERSON WHO PROMISES TO PAY IS
CALLED THE “MAKER”.THE PERSON WHO IS PROMISSED THE PAYMENT IS
CALLED THE “PAYEE”ELEMENTS OF A PROMISSORY NOTEWRITING:

The promissory note must be in writing. Oral engagement or promise is excluded. No

particular form of words is necessary. It may be in any form but the words shall be visible.
Intention to make a note must be clear.

UNDERTAKING TO PAY: It is not necessary to use the word “promise” but the intention
must clearly show an ‘unconditional undertaking’ to pay the amount. The word ‘promise’ does
not mean that a document is not a promissory note, provided it fulfils the requirements of this
section and there is clear intention on the part of the parties to treat the document as a promissory
note.

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UNCONDITIONAL: It must contain definite and an unconditional undertaking to pay.
Promise to pay should be unconditional. A conditional instrument is invalid. It must be certain of
payment.

Unconditional promissory note:

a)A promise given for an executed consideration.

b)Any promise to pay an instrument on lapse of certain periods,after a specified event which is
certain to happen.

SIGNED: The instrument must be signed by the maker thereof. Person must sign with his
consent. It should not only be a physical act but also a mental act with an intention to sign.

CERTAIN PERSON: The maker and payee of the instrument must be a definite person. A note
may be made by several people to bind themselves jointly. A promissory note cannot be made by
two persons. Two different people should fill in the role of a maker and payee. The maker
endorses the note. Payee is capable of being ascertained where he is wrongly described, he will
be a certain person.

E.g. - a promissory note payable to “my only niece living in England”....is a valid promissory
note.

SPECIFIC SUM: The sum promise to be paid must be specific.

PROMISE TO PAY MONEY ONLY: The promise to pay must be money only. Promise to pay
anything other than legal tender, in full or in part, is not a promissory note.

STAMPING: Promissory notes are chargeable with stamp duty. It is advisable to cancel the
stamps with maker’s signature or initials. An unstamped or improperly or insufficiently stamped
promissory note is not valid as evidence in court of law. No suit can be maintained upon an
unstamped or improperly stamped promissory note.

BILLS OF EXCHANGE

DEFINATION:
“A bill of exchange is an instrument in writing containing an unconditional order, signed by the
maker, directing a certain person to pay a certain sum of money only to, or to the order, a certain
person or to theBearer of the instrument.”

ESSENTIAL ELEMENTS OF A BILL OF EXCHANGE WRITING: -

A bill of exchange must be in writing and may be in any language, and in any form.
PARTIES: - There must be three parties to a bill of exchange, i.e., Drawer, Drawee and Payee.

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 PAYEE:- Payee as the person named in the instrument, to whom or to whose order the money,
by the instrument directed to be paid.

ORDER TO PAY: - The bill of exchange must contain an order by the drawer to the drawee to
pay under any circumstances.

UNCONDITIONAL: - The o0rder in the bill must be unconditional, for example, payable
under all events and circumstances. Conditional bill is invalid.

SIGNED: - The bill must be signed by the drawer.

MONEY:- The order must be to pay money only

PAYEE MUST BE CERTAIN: - Bill may be made payable to two or more payees jointly or in
the alternatives.

CERTAIN SUM: - The sum payable may be ‘certain’ although it includes future interest or is
payable at an indicated rate of exchange, or is according to the course of exchange.

STAMPING:-Bill of exchange is chargeable with stamp duty.

HUNDI:-

Bills of exchange drawn in vernacular language called ‘hundis’ are covered by the Act. The word
'hundi', a generic term used to denote instruments of exchange in vernacular is derived from the
Sanskrit root 'hundi' meaning 'to collect' and well expresses the purpose to which instruments
were utilized in their origin. The Act does not affect any local usage relating to any instrument in
an oriental language. In the absence of any custom or usage governing such instruments,
provisions of the Act will be extended to such other instruments, for example, hundis, bills of
landing, railway receipt, etc. The act does not affect the transfer of instruments under ordinary
law otherwise than by negotiation, for e.g. by assignment. A bonafide transferee of a negotiable
instrument for value, without notice of any defect acquires the instrument free of any defects. He
acquires a better title than that of the transferor irrespective of the transferor’s title being
defective.

HOW PROMISSORY NOTE BECOMES A BILL OF EXCHANGE?

An instrument which is a promissory note may become a bill of exchange if acceptance is

endorsed thereon by a third party.

BILLS IN SETS

Bills of exchange may be drawn in parts. All the parts together make a set, but the whole set
constitutes only one bill. Bills are sometimes drawn in several parts. All the parts so drawn are

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referred as bill ‘drawn in sets’. The drawer of the ‘bills in sets’ has to sign all the parts and
deliver all the parts but the acceptance should be written only on one part. If the drawee accepts
more than one part and if such separate accepted parts get into the hands of different holders in
due course, he and the subsequent endorsers of each part are liable on every such part as if it
were a separate bill.

CHEQUE
A Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise then on demand. A cheque is drawn on a banker only while a bill of exchange can be
drawn on any one. A cheque is an unconditional order on the specified banker to pay on demand,
a certain sum of money to the bearer of the cheque or to his order. A bill of exchange is wider
than a cheque.A cheque is not valid because it is post-dated. A cheque must be dated. Unlike a
promissory note and a bill of exchange, cheque may be drawn payable to bearer on demand.
Cheque crossed generally Where a cheque bears across its face an addition of the words "and
company" or any abbreviation thereof, between two parallel transverse lines, or of two parallel
transverse lines, simply, either with or without the words "not negotiable", that addition shall be
deemed a crossing, and the cheque shall be deemed to be crossed generally
Cheque crossed specially Where a cheque bears across its face an addition of the name of a
banker, either with or without the words "not negotiable", that addition shall be deemed a
crossing, and the cheque shall be deemed to be crossed specially, and to be crossed to that
banker.

Crossing after issue Where a cheque is uncrossed, the holder may cross it generally or specially.
Where a cheque is crossed generally, the holder may cross it specially.
Where a cheque is crossed generally or specially, the holder may add the words "not negotiable".
Where a cheque is crossed specially, the banker to whom it is crossed may again cross it
specially to another banker, his agent, for collection.Payment of cheque crossed generally
Where a cheque is crossed generally, the banker on whom it is drawn shall not pay it otherwise
than to the banker Payment of cheque crossed specially

Where a cheque is crossed specially, the banker on whom it is drawn shall not pay it otherwise
than to the banker to whom it is crossed or his agent for collection
Payment of cheque crossed specially more than once Where a cheque is crossed specially to
more than one banker, except when crossed to an agent for the purpose of collection, the banker
on whom it is drawn shall refuse payment thereof. Payment in due course of crossed cheque
Where the banker on whom a crossed cheque is drawn has paid the same in due course, the
banker paying the cheque, and (in case such cheque has come to the hands of the payee) the
drawer thereof, shall respectively be entitled to the same rights, and be placed in the same
position in all respects, as they would respectively be entitled to and placed in if the amount of
the cheque had been paid to and received by the true owner thereof. Payment of crossed cheque
out of due course Any banker paying a cheque crossed generally otherwise than to a banker, or a
cheque crossed specially otherwise than to the banker to whom the same is crossed, or his agent

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for collection, being a banker, shall be liable to the true owner of the cheque for any loss he may
sustain owing to the cheque having been so paid. Cheque bearing "not negotiable"
A person taking a cheque crossed generally or specially, bearing in either case the words "not
negotiable", shall not have, and shall not be capable of giving, a better title to the cheque than
that which the person from whom he took it had. Non-liability of banker receiving payment of
cheque A banker who has in good faith and without negligence received payment for a customer
of a cheque crossed generally or specially to himself shall not, in case the title to the cheque
proves defective, incur any liability to the true owner of the cheque by reason only of having
received such payment

Q-2- Define Indepenend voild agreement and voidable contract?

THIS INDEPENDENT CONTRACTOR'S AGREEMENT

(the "Agreement") is made as of Date, Year by and between "Company
Name" (the Company), and "Independent Contractor's Name" (the
Independent Contractor) a corporation/sole proprietorship/whatever
with its principal place of business at "Independent Contractor's
Address".

In consideration of the mutual premises herein contained, Company and

Independent Contractor hereby agree as follows:
1: ENGAGEMENT
The Company hereby engages the Independent Contractor to render the
services, and deliver the reports, according to the schedule and as
described in the annexed Exhibit A (collectively, the "Services"). In the
event of any conflict between this Agreement and the annexed Exhibit
A, this Agreement shall control.
2: COMPENSATION
A. In full consideration for the performance of the Services hereunder,
and for any rights granted or relinquished by the Independent Contractor
under this Agreement, the Company shall pay the Independent
Contractor as follows (check as applicable):

_____ on a time and materials basis at the following rates: _____

or
_____ a fixed fee (the "Fee") in the amount of $ _____ payable in
installments as follows: _____

B. Payments shall be preceded by an invoice from the Independent

Contractor (to be submitted monthly), which Company shall then pay in
the ordinary course.

C. The Company will reimburse the Independent Contractor for

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 reasonable and necessary expenses incurred in the performance of the
Services; provided, however, that all such expenses shall be subject to
Company's prior approval. Air travel shall be at coach fares and lodging
shall be at moderately priced hotels, taking advantage of available
corporate discounts.

D. Independent Contractor acknowledges and agrees that, except as

provided in this Section 2, it shall not be entitled to, and the Company
shall not be obligated to pay, any monies or other compensation for the
Services provided and rights granted under this Agreement.
3: ASSURANCE OF SERVICES
A. Independent Contractor will assure that the following individuals (the "Key
Employees") will be available to perform, and will perform, the Services
hereunder until they are completed

.
4: INDEPENDENT CONTRACTOR RELATIONSHIP
A. The Independent Contractor agrees to perform the Services
hereunder solely as an Independent Contractor. The parties to this
Agreement recognize that this Agreement does not create any actual or
apparent agency, partnership, franchise, or relationship of employer and
employee between the parties. The Independent Contractor is not
authorized to enter into or commit the Company to any agreements, and
the Independent Contractor shall not represent itself as the agent or legal
representative of the Company.

5: PROPRIETARY RIGHTS
A. The Independent Contractor acknowledges that it has no right to or
interest in its work or product resulting from the Services performed
hereunder, or any of the documents, reports or other materials created
by the Independent Contractor in connection with such Services, nor
any right to or interest in any copyright therein. The Independent
Contractor acknowledges that the Services and the products thereof
(hereinafter referred to as the "Materials") have been specially
commissioned or ordered by the Company as "works made-for-hire" as
that term is used in the Copyright Law of the United States, and that the
Company is therefore to be deemed the author of and is the owner of all
copyrights in and to such Materials.

.
6: CONFIDENTIALITY
A. In connection with the performance of Services hereunder, the
Independent Contractor may be exposed to confidential and proprietary
information of the Company, whether or not so identified (including

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 without limitation this Agreement). All such confidential and
proprietary information shall be subject to the terms and conditions of
the Non-Disclosure Agreement, as annexed in Exhibit B.

7: WARRANTIES AND INDEMNIFICATION

The Independent Contractor represents and warrants that:

i) The Services shall be performed in accordance with, and shall not

violate, applicable laws, rules or regulations, and standards prevailing in
the industry and the Independent Contractor shall obtain all permits or
permissions required to comply with such laws, rules or regulations;

ii) The Materials shall be original, clear, and presentable in accordance

with generally applicable standards in the industry;

iii) The Materials will not contain libelous, injurious, or unlawful

material and will not violate or in any way infringe upon the personal or
proprietary rights of third parties, including property, contractual,
employment, trade secrets, proprietary information, and non-disclosure
rights, or any trademark, copyright, or patent, nor will they contain any
format, instruction, or information that is inaccurate or injurious to any
person, computer system, or machine;

vi) The Independent Contractor has full power and authority to enter
into and perform its obligations under this Agreement; this Agreement is
a legal, valid, and binding obligation of Independent Contractor,
enforceable against it in accordance with its terms (except as may be
limited by bankruptcy, insolvency, moratorium, or similar laws
affecting creditors' rights generally and equitable remedies); entering
into this Agreement will not violate the Charter or By-laws of
Independent Contractor or any material contract to which it is a party;

v) The Independent Contractor will perform the Services in accordance

with the specifications established by the Company.

8: TERM AND TERMINATION

The term of this Agreement shall commence on the date hereof and
shall continue until the Independent Contractor satisfactorily completes
performance of the Services (hereinafter the "Term").

9: DAMAGES AND REMEDIES

In the event of termination of this Agreement by the Company pursuant
to Section 8.B (i), the Company shall have all remedies available to it at

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 law and in equity. Any and all Materials prepared for and/or delivered to
the Company prior to termination shall remain the property of the
Company.

voidable contract . Independent Contractor. Subject to the terms and conditions of this
Agreement, the Company hereby engages the Contractor as an independent contractor to perform
the services set forth herein, and the Contractor hereby accepts such engagement.

Voidable

In law, a transaction or action which is voidable is valid, but may be annulled by one of the
parties to the transaction. Voidable is usually used in distinction to void ab initio (or void from
the outset) and unenforceable.

The act of invalidating the contract by the party exercising its rights to anul the voidable contract
is usually referred to either as voiding the contract (in the United States and Canada) or avoiding
the contract (in the United Kingdom, Australia and other common law countries).

Voidable. That which may be avoided, or declared void; not absolutely void, or void in
“ itself. It imports a valid act which may be avoided rather than an invalid act which may
be ratified. United States v Price, D.C. Iowa, 514 F.Supp. 477,480 ”

Generally speaking, one party will have the right to elect whether to annul the transaction or to
affirm it. The avoiding of a voidable transaction amounts to the rescinding it, or exercising a
power of rescission, and as such is subject to the general law in that regard.

The right to rescind can be lost. In common law there are generally said to be four "bars" to
rescission, any one of which will cause the agreement to no longer be considered voidable.

1. delay
2. affirmation (or ratification)
3. restitutio in integrum being impossible
4. third party rights

Although the law varies from country to country, most disputes relating to whether a transaction
is void or voidable turn on the ability to transfer title to goods. In many jurisdictions, if a
transaction is valid, but voidable, title to good still passes under the transaction, and the recipient
may sell them with good title. If the transaction is void, no title passes, and the original seller can
reclaim the goods.

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Independent Contract This Agreement shall not render the Contractor an employee, partner,
agent of, or joint venturer with the Company for any purpose. The Contractor is and will remain
an independent contractor in [his or her] relationship to the Company. The Company shall not be
responsible for withholding taxes with respect to the Contractor’s compensation hereunder. The
Contractor shall have no claim against the Company hereunder or otherwise for vacation pay,
sick leave, retirement benefits, social security, worker’s compensation, health or disability
benefits, unemployment insurance benefits, or employee benefits of any kind.

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