...THE LAW ON NEGOTIABLE INSTRUMENTS Definition of Terms CHAPTER 1 Form and Interpretation Section 1. Form of Negotiable Instruments Commercial Paper – a written promises or obligations that arise out of commercial transactions from the use of such instruments as promissory notes and bills of exchange. Maker – the person issuing a promissory note Drawer – person issuing bill of exchange Money - medium of exchange authorized or adopted by a domestic or foreign government as part of its currency. In literal sense, the term means “cash.” It also includes all legal tender. Legal Tender – that currency which a debtor can legally compel a creditor to accept a payment of a debt in money when tendered by the debtor in the right amount. Non-negotiable Instrument – an instrument which is not negotiable, which does not meet the requirements lay down to qualify an instrument as a negotiable one, or an instrument which in its inception was negotiable but has lost its quality of negotiability. A non-negotiable instrument may not be negotiated but it may assigned or transferred Negotiable Promissory Note – an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, a sum certain in money or to bearer. It is commonly referred to as a note. Payee – the party to whom the promise is made or the instrument is payable. Bill of exchange – an unconditional...
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...THE NEGOTIABLE INSTRUMENTS ACT AND THE NEGOTIABLE INSTRUMENTS (AMENDMENT AND MISCELLANEOUS PROVISIONS) ACT, 2002 Negotiable instruments are of great importance in the business world and by extension in banking. They are instruments for making payments and discharging business obligations What is a Negotiable Instrument? The Negotiable Instruments Act does not define a negotiable instrument but merely states, “ a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or bearer.” (Section 13). This section does not prohibit any other instrument that satisfies the essential features of portability. Justice K. C. Willis defines these as, “ one the property in which is acquired by anyone who takes it bonafide and for value notwithstanding any defect in title in the person from whom he took it.” Thomas defines it in his book “Commerce, Its theory and Practice “A negotiable instrument is one which is, by a legally recognized custom of trade or by law, transferable by delivery in such circumstances that (a) the holder of it for the time being may sue on it in his own name and (b) the property in it passes, free from equities, to a bona-fide transferee for value, notwithstanding any defect in the title of the transferor.” It : (1) entitles a person to a sum of money (2) is transferable (by customs of trade) by delivery, like cash, or by Endorsement and delivery and delivery, and (3) ...
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...THE NEGOTIABLE INSTRUMENT LAW SECTION . 5. Additional provisions not affecting negotiability. - An instrument which contains an order or promise to do any act in addition to the payment of money is not negotiable. But the negotiable character of an instrument otherwise negotiable is not affected by a provision which authorizes the sale of collateral securities in case the instrument be not paid at maturity; or (b) Authorizes a confession of judgment if the instrument be not paid at maturity; or (c) Waives the benefit of any law intended for the advantage or protection of the obligor; or (d) Gives the holder an election to require something to be done in lieu of payment of money. But nothing in this section shall validate any provision or stipulation otherwise illegal. Acts in addition to payment of money A negotiable instrument must be payable in “a sum certain in money.” (1) General Rule. – As a general rule, the instrument is non-negotiable if it contains a promise or order to do any act in addition to the payment of money. (par. 1.) The prohibition is based on the fact that while one could be indorsed, the other would have to be assigned. (see Sec. 30) EXAMPLES: “I promise to pay or order P1,000.00 and to deliver a horse.” (2) Exceptions. – The law, however, gives exceptions (Sec. 5 [a to d.] to the general rule. a. Sale of collateral securities. EXAMPLE: “I promise to pay P or order the sum of P10,000.00 on November 25,2004...
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...Assignment on Negotiable Instrument Course Title: Legal Environment of International Business Prepared by: Farha Fatema Date of Submission: 28/04/2011 Executive Summary Negotiable instruments are written orders or unconditional promises to pay a fixed sum of money on demand or at a certain time. Promissory notes, bills of exchange, checks, drafts, and certificates of deposit are all examples of negotiable instruments. Negotiable instruments may be transferred from one person to another, who is known as a holder in due course. Upon transfer, also called negotiation of the instrument, the holder in due course obtains full legal title to the instrument. Negotiable instruments may be transferred by delivery or by endorsement and delivery. One type of negotiable instrument, called a promissory note, involves only two parties, the maker of the note and the payee, or the party to whom the note is payable. With a promissory note, the maker promises to pay a certain amount to the payee. Another type of negotiable instrument, called a bill of exchange, involves three parties. The party who drafts the bill of exchange is known as the drawer. The party who is called on to make payment is known as the drawee, and the party to whom payment is to be made is known as the payee. A check is an example of a bill of exchange, where the individual or business writing the check is the drawer, the bank is the drawee, and the person or business...
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...Short essay on the negotiable instruments in business law The law relating to “negotiable instruments” is contained in the Negotiable Instruments Act, 1881. The Act extends to the whole of India. The Negotiable Instruments Act, 1881, has been amended for more than a dozen times so far. The latest in the series are: (i) the Banking, Public Financial Institutions and Negotiable Instruments Laws (Amendment) Act, 1988 (effective from 1st April, 1989), and (ii) the Negotiable Instruments (Amendment and Miscellaneous Provisions) Act, 2002 (effective from 6th February, 2003). The provisions of all the Amendment Acts have been incorporated at relevant places in Part IV of this book. The Negotiable Instruments Act, 1881, as amended up-to-date, deals with three kinds of negotiable instruments, i.e., Promissory Notes, Bills of Exchange and Cheques. Definition: The word negotiable means ‘transferable by delivery,’ and the word instrument means ‘a written document by which a right is created in favour of some person.’ Thus, the term “negotiable instrument” literally means ‘a written document transferable by delivery.’ According to Section 13 of the Negotiable Instruments Act, “a negotiable instrument means a promissory note, bill of exchange or cheque payable either to order or to bearer.” “A negotiable instrument may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees”...
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...A negotiable instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time, with the payer named on the document. More specifically, it is a document contemplated by or consisting of a contract, which promises the payment of money without condition, which may be paid either on demand or at a future date. The term can have different meanings, depending on what law is being applied and what country it is used in and what context it is used in. Examples of negotiable instruments include promissory notes, bills of exchange, banknotes, and cheques. Because money is promised to be paid, the instrument itself can be used by the holder in due course as a store of value. The instrument may be transferred to a third party; it is the holder of the instrument who will ultimately get paid by the payer on the instrument. Transfers can happen at less than the face value of the instrument and this is known as discounting; this may happen for example if there is doubt about the payer's ability to pay. Common prototypes of bills of exchanges and promissory notes originated in China. There, in the 8th century during the reign of the Tang Dynasty they used special instruments called feitsyan for the safe transfer of money over long distances.[1] Later such document for money transfer used by Arab merchants, who had used the prototypes of bills of exchange – suftadja and hawala in 10–13th centuries, then such prototypes had been used by Italian...
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...law LAW 504 PANCITO, Hazeleen Rose B. 3:30-5:30 PM Title I. - Negotiable Instruments in General Article I. - Form and Interpretation. SEC. 1. An instrument to be negotiable must conform to the following requirements: 1. It must be in writing and signed by the maker or drawer. 2. Must contain an unconditional promise or order to pay a sum certain in money. 3.Must be payable on demand or at a fixed or determinable future time. 4. Must be payable to the order or to bearer; and, 5. Where the instrument is addressed to a drawee,he must be named or otherwise indicated therein with reasonable certainty. Writing And Signature Writing and signature of maker or drawer are essentialto negotiability. Our natural conception of a negotiable instrument is that of a written paper. "Writing" includes print.12 The substance of the impression may be ink or lead.13 The former is of course preferable from the standpoint of sound and safe business practice. Signature. An instrument to be negotiable must be signed. "No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed in his own name." Example 8. Anotesigned "Western Novelty Co., Unincorporated" binds all who go under that trade name, assuming that the note is given under the authority of those sought to be held. Printed or lithographed signature is a legal...
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...issues. In the first fact pattern the issues presented are holder in due course, negotiable instrument, ordinary contract principles, and estoppel. In the following fact pattern, the issue presented is surety versus guaranty. The issues will be solved by analyzing the law of the specific topic or term. First State Bank of Gallup was trying to collect from the maker of the note, in this case Daniels, because Clark defaulted on the loan after several payments. Daniel refuses to pay arguing that the note was a nonnegotiable instrument and therefore invalid in the hands of the bank. For First State Bank to able to collect from Daniels, has to be a holder in due course if the note is a negotiable instrument. Under the U.C.C. – Article 3 – a holder in due course means the “holder of an instrument if: the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense...
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...Negotiable Instruments (Writing Assignment 6) BA 265 Business Law December 11, 2013 Negotiable Instruments Negotiable Instrument is the name of a document that promises to pay a sum of money. The document states that the singer of the document agrees to pay the owner of the document a set amount of money which is also stated on the document. On the back of an envelope, Phoebe writes, “I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe.” This instrument is a promissory note and a bearer note, and it is negotiable. A promissory note is a written promise made by one person (the maker) to pay a fixed sum of money to another person (the payee) on demand or at a specified future time. The maker of this note is Phoebe. The payee is Quint or bearer. A note that is payable to a specific payee or bearer is a bearer note. A bearer is anyone holding something such as a check, promissory note, bank draft, or bond. This is important when the document states it is payable to bearer which means whoever holds this paper can receive the funds due on it. A negotiable instrument that is payable to bearer or to cash or to the order of cash that is not naming a payee, is a bearer instrument and is called bearer paper. To be negotiable, an instrument must be written, be signed by the maker or drawer, be an unconditional promise or order to pay, state a fixed amount of money, be payable on demand or at a definite time, and be payable to order or to bearer unless it is a...
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...Question 1: Explain the term negotiable instruments and briefly state its types. Negotiable instrument is a document that constitutes an obligation to pay a sum of money at a future date or on demand. According to Justice Willis, “a negotiable instrument is one, the property in which is acquired by anyone who takes it bona fide and for value notwithstanding any defects of the title in the person from whom he took it”. Any document is capable of being called a “negotiable instrument” if the following conditions are met: 1. The holder of the instrument may sue in his/her own name. 2. Title to the instrument must pass on delivery, or on delivery and endorsement. 3. A "holder in due course" takes the instrument free from the defects in title of his/her predecessors. Essential Features of a Negotiable Instrument: 1. A Negotiable Instrument is a written instrument 2. Signed by the maker or drawer of the instrument A signature may be any symbol made by the maker or drawer with the present intention to be a signature. 3. It must contain an unconditional promise or order to pay A mere acknowledgment of a debt is not sufficient without evidence of an affirmative undertaking on the part of the debtor to repay the debt. 4. An exact sum of money (with or without interest in a specified amount or at a specified rate) must be stated. Fixed amount means an amount that can be determined from the face of the instrument. Payable in money means the medium of exchange authorized or...
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...SUMMARY JUDGMENT The above case came before the Court on the defendant’s motion for summary judgment filed on August 1, 2006, in response to the debtor-plaintiff’s complaint alleging the creditor-defendant violated the automatic stay [i.e. 11 U.S.C. § 362(a)] by cashing the plaintiff’s check after she filed a petition for relief under Chapter 13 of the U.S. Bankruptcy Code. The defendant avers it did not violate the automatic stay because of the exception provided in 11 U.S.C. § 362(b)(11). The Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and 1334. The Court heard oral arguments on September 12, 2006 and directed the parties to file additional briefs dealing with whether the check at issue qualified as a negotiable instrument. For the reasons stated below, the 1 Case 06-40087-JJR Doc 31 Filed 10/26/06 Entered 10/26/06 08:56:27 Document Page 1 of 10 Desc Main Court finds the motion for summary judgment is due to be GRANTED. Background On April 15, 2006, the plaintiff received a “payday loan” for $500.00 from the defendant. In exchange for the $500.00 loan, the plaintiff gave the defendant a check for $587.50, which was intended to pay the principal of the loan plus interest and fees. The defendant agreed to hold the check until April 29, 2006. On May 9, 2006, the debtor-plaintiff filed for Chapter 13 bankruptcy relief. For purposes of this summary...
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...can sue on a negotiable instrument unless he is named therein as the payee or unless he becomes entitled to it as indorsee or becomes the bearer of an instrument payable to bearer. In the Full Bench case reported in Subba Narayana Vathiyar v. Ramaswami Aiyar,1 it has been held that in a suit on a negotiable instrument by the payee or indorsee, it is not open to the defendant to plead that the plaintiff is a mere benamidar not entitled to payment with a view to show that the note has been discharged by payment to real owner. Again in the Full Bench decision of the Patna High Court in Bacha Prasad v. Janaki,2 it has been held that a person who is not a holder of a negotiable instrument cannot maintain a suit for recovery of money due under it even though holder is admittedly the benamidar and is impleaded in the suit. In the said decision, it has also been held that "a beneficiary cannot be called a holder of the instrument and payment to him cannot discharge the maker thereof unless the case falls under section 82(c) of the Act". So also, it has been held in the decision reported in Subharaya v. Abiram,3 that a beneficiary does not become a holder of the instrument even upon getting a declaration that he is the beneficial owner and the payee is only a benamidar. In this connection it has to be noted that Allahabad and Rajasthan High Courts have taken a slightly different view and held that in certain cases a beneficiary may maintain a suit on a negotiable instrument "if holder is...
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...Uniform Sales Act, the Negotiable Instruments Law, the Uniform Warehouse Receipts Act, the Uniform Bills of Lading Act, the Uniform Stock Transfer Act, the Uniform Trust Receipts Act, and numerous other statutes. Massachusetts thus became the second state to enact the Code, following the lead of Pennsylvania, where the Code, enacted in April 1953, took effect on July 1, 1954. In March 1958 the Code was enacted in Kentucky, effective July 1, 1960. Proposals to enact the Code will undoubtedly come before legislatures in other states in the course of the next few years, and it seems likely that several other states will join the procession at their 1959 sessions (Braucher, 1958). The Uniform Commercial Code (UCC or the Code), first published in 1952, is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America. The Uniform Commercial Code, or UCC, is a very large collection of legal rules regarding many important business, or “commercial,” activities. The UCC originally was created by two national nongovernmental legal organizations: the National Conference of Commissioners on Uniform State Laws (NCCUSL) and the American Law Institute (ALI) (Steingold, 2013). As the word “Uniform” in its title suggests, a primary purpose of the UCC is to make business activities more predictable and efficient by making business laws highly consistent across...
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...NEGOTIABLE INSTRUMENTS ACT,1881 Definition of a Negotiable Instrument. The law relating to negotiable instruments is contained in the Negotiable Instruments Act, 1881. It is an Act to define and amend the law relating to promissory notes, bills of exchange and cheques. The Act does not affect the custom or local usage relating to an instrument in oriental language i.e., a Hundi. The term "negotiable instrument" means a document transferable from one person to another. However the Act has not defined the term. It merely says that "A .negotiable instrument" means a promissory note, bill of exchange or cheque payab1e either to order or to bearer. [Section 13(1)] A negotiable instrument may be defined as "an instrument, the. property in which is acquired by anyone who takes it bona fide, and for value, notwithstan~ing any defect of title in the person from whom he took it, from which it follo~s that an instrument cannot be negotiable unless it is such and in such a state that the true owner could transfer the contract or engagement contained therein by simple delivery of instrument" (Willis- The Law of Negotiable Securities, Page 6). According to this definition the following are the conditions of negotiability: (i) The instrument should be freely transferable. An instrument cannot be negotiable unless it is such and in such state that the true owner could transfer by simple delivery or endorsement and delivery. (ii) The person who takes it for value...
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...months, Rogers and Blythe stopped paying their loan to Charter. Charter sued to recover from Holly Hill’s note and mortgage. Negotiable instruments are an important component of transactions between unrelated parties when doing business. Negotiable instruments are regulated by Article 3 of the UCC. Article 3 requires a document must meet certain criteria in order to be classified as a negotiable instrument. The instrument must be in writing, permanent and portable, signed by the maker, and it must be an unconditional promise to pay. It has to state a fixed sum of money and not require any additional undertaking besides the payment. It also has to be payable on demand or at a definite time and be payable to order or bearer. If these conditions are met, the holder of the negotiable instrument can transfer their interest in the instrument to a third party. The third party taking the negotiable instrument from the holder becomes the holder in due course. The promissory note in this case stated above contained language that referenced the other mortgage. Because the note referenced the other mortgage, it does not pass the test for not requiring any additional undertaking besides payment and is therefore not a negotiable instrument and not enforceable under Article 3 of the UCC. Because the document is determined to not be a negotiable instrument, the holder...
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