NAME AFZAL KHAN

ROLL.NO (17)
 NEGOTIABLE INSTRUMENTS

 Negotiable instruments are specialized types of

documents that represent a promise to pay a specific
amount of money to a designated person or the
bearer of the instrument. These instruments facilitate
the transfer of money or financial assets and are
commonly used in commercial transactions. The key
characteristic of negotiable instruments is their
transferability, allowing them to be transferred from
one party to another.
There are three main types of
negotiable instruments:
  Promissory Note:

A promissory note is a written

promise from one party (the maker)

to pay a specific sum of money to

another party (the payee) at a

specified future date or on demand.

 Promissory Note:
It includes essential elements such as

the names of the parties, the amount to

be paid, the date of payment, and the

terms and conditions of repayment.

  Bill of Exchange:

 A bill of exchange is a written

order from one party (the drawer)
to another party (the drawee) to
pay a specified sum of money to a
third party (the payee).
 Bill of Exchange:
It involves three parties: the

drawer, the drawee, and the

payee. The drawer and the payee

can be the same person.

  Cheque:
A cheque is a written order from an
account holder (drawer) to a bank
to pay a specific sum of money to a
designated person (payee) or to the
bearer.
 Cheque:
 Unlike a bill of exchange, which involves

three parties, a cheque involves two

parties—the drawer and the payee.

 Key features of

negotiable instruments

include:
  Transferability:

 The right to receive payment can be

transferred from one party to another by

endorsement or delivery.
  Negotiability:

 The transferee (person receiving the

instrument) acquires certain rights and

privileges, often without knowledge of

the underlying transaction.

  Holder in Due Course
 If a party acquires a
negotiable instrument in
good faith, for value, and
without notice of any
defects, they may
become a "holder in due
course" with certain legal
advantages.
 Holder in Due Course
 negotiable instrument characteristics

 Negotiable instruments are specialized types

of commercial paper that have specific

characteristics that make them easily

transferable and assignable. The key

characteristics of negotiable instruments

include:
  In Writing:

 A negotiable instrument must be in

writing. It can be a formal document

or a piece of paper, but it must be a

tangible medium.
 Signed by the Maker or Drawer:

 The instrument must be signed by the

person creating the instrument (the

maker in the case of promissory notes,

the drawer in the case of checks).

 Unconditional Promise or Order to Pay:

 The language used in the instrument must

be a clear and unconditional promise to

pay a specific sum of money or an order to

pay.
 Fixed Amount of Money:

 The amount to be paid must be certain or

capable of being determined with certainty.

It should be a fixed amount, and not

dependent on any future contingencies.

 Payable on Demand or at a Definite
Time:

 The payment must be either on-demand

(e.g., checks) or at a specific future date. If

the time of payment is not specified, it is

assumed to be payable on demand.

 Payable to Order or Bearer:

 The instrument must be payable to the

order of a specific person or to bearer. If it

is payable to order, it means it can be

transferred by endorsement. If payable to

bearer, it can be transferred by mere

delivery.
 No Other Undertakings or Instructions:

The instrument should not contain

any other conditions or instructions

for payment, aside from the basic

promise or order to pay.

  Holder in Due Course:

 A holder in due course is someone who

acquires the negotiable instrument in good

faith, for value, without notice of any

defects or irregularities in the instrument.

Holders in due course have certain legal

rights and protections.

  Negotiability

 : The instrument must be capable of being

transferred from one party to another in a

way that conveys legal ownership. This is

often done through endorsement and

delivery.