Negotiable

Instruments

Presented by:
1. Shaila Khan
2. Vishnu Vijaya Kumar
3. Vaibhav Tanwar
4. Ummehani
Negotiable instrument
• Negotiable transferable

• Instrument Written document

A negotiable instrument is a piece of paper which

entitles a person to a sum of money and which is
transferable from person to person.
Used in commercial transactions and monetary
dealings.
For example:- Borrow money from a bank to buy a house

Negotiable instrument
● Common examples of negotiable instruments include checks, money orders,
and promissory notes.

● Definition:
● According to section 13 of Negotiable Instruments Act,
1881- A 'negotiable instrument' means a promissory note, bill
of exchange or cheque payable either to order or to bearer.

Purpose

● To avoid the carriage of higher amount of money

● To reducing the risk of theft; robbery etc.

 Charectristics

A B C

owner of property holder in due course Rights

contained therein

D E
Presumptions Prompt payment
 Classification of Negotiable Instruments
1. Bearer Instruments

There are two important conditions for negotiable instruments to become payable to bearers. Firstly, parties to the
transactions must express it to be so payable. Secondly, the only endorsement for it should be an endorsement in blank.

2. Order Instruments

Negotiable instruments can often be payable to order in certain cases. They are payable when the instruments expressly
state them to be so. .

3. Inland Instruments

Section 11 of the NI Act deals with inland instruments. This provision basically regulates instruments that are drawn and
made payable in India. 

4. Foreign Instruments

Every instrument that is not inland automatically becomes a foreign instrument. These instruments are drawn in a foreign
country but may be payable within or outside India.
5. Demand Instruments

An instrument may not specify a time period during which it remains payable. Such instruments are generally payable whenever the
bearer demands.

6. Time Instruments

Unlike demand instruments, time instruments carry a fixed future date for payment.

7. Ambiguous Instruments

An ambiguous instrument is basically 0ne that may be either a bill or a note for its holder.

8. Incomplete instruments

Incomplete instruments lack certain essential requirements of typical negotiable instruments. In such cases, the holder of the
instrument has the authority to complete it up to the amount mentioned therein. This, in turn, results in the creation of legally binding
negotiable instrument payable by law. Not only the first holder but also any subsequent holder who procures such instruments can
complete them.
 Negotiable instrument types

1. Cheques
. 
2. Traveller’s cheque

3. Money order
4. Bill of exchange

5. Promissory note
4. Certificate of deposit
Example of DD
 Case Study
• By means of fall preference A has obtain from B a cheque
crossed “not negotiable” he took that cheque to a bank (other
than drawee bank) which paid it. B sues the bank for
conversion.

Has A committed any offence or irregularity. Under the negotiable

instrument act.
Is B entitled to get any relief?
How will you decide the case
Thank You

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