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Amity Business School: MBA, Semester 1 Legal Aspects of Business Ms. Shinu Vig
Amity Business School: MBA, Semester 1 Legal Aspects of Business Ms. Shinu Vig
It must be in writing. It must be signed by the maker/drawer. It must involve payment of money only. There must be an unconditional promise or order to pay. They are transferable by delivery or by endorsement and delivery.
Promisory Note-Specimen
Rs 10,000
On demand, or six months after date, I promise to pay X ,or order, the sum of Rs 10,000 ( Rs ten thousand only) with interest at 12 percent per anum for value received. To: X Sd-A (Maker) Address..(Payee) Stamp
Promisory Note-examples
I promise to pay B Rs 1,000. I acknowledge to be indebted to B in Rs 1,000, to be paid on demand, for value received. I promise to pay Rs 1,000 to your eldest son on your death. (Conditional upon death, which is certain). I promise to pay you $1,000 in equivalent rupees on January 31, 2011 ( exchange rate of $ is certain). Mr B , IOU Rs 1,000. (No express undertaking to pay) I promise to pay B Rs 1,000, and all other sums which shall be due to him (uncertain sum)
Bills of Exchange (Section 5): A Bill of Exchange is an instrument in containing an unconditional order signed maker, directing a certain person to pay a sum of money only to or to the order of a person or to the bearer of the instrument. Parties to a Bill of Exchange: i. The drawer ii. The drawee (also called the acceptor) iii.The payee
Bill of Exchange-Specimen
Rs 10,000
New Delhi 110001 August 30, 2012 Six months after date pay to A, or order,/ bearer the sum of Rs 10,000 ( Rs ten thousand only) with interest at 12 percent per anum for value received. To: X Sd-Y (Drawer) Address..(Drawee) Stamp
[ X will express his willingness to pay by Accepting the bill by writing Accepted and signing with date] Accepted Sd.-X, September 20,20112.
i.General crossing - In case of general crossing, the holder or payee cannot get the payment over the counter of the bank but through a bank only.
ii.Special crossing - In case of special crossing, the paying banker will pay only to the banker whose name appears across the cheque.
Endorsement : Endorsement means and involves the writing of something on the back of an instrument for the purpose of transferring the right, title and interest therein to some other person.
Kinds of Endorsements: Endorsement in blank Endorsement in full Restrictive Endorsement Conditional Endorsement Partial Endorsement
If a cheque is returned by the bank unpaid for the reason of insufficiency of the amount of money standing to the credit of the account on which the cheque was drawn, the drawer of such cheque shall be deemed to have committed an offence. The Act provides for criminal penalties in such case: i. Imprisonment for term which may extend to 2 years, or ii. Fine which may extend to twice the amount of cheque, or iii. Both