...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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...Section 138 of Negotiable Instruments Act WHAT IS A CHEQUE? (Section 6) A “cheque” is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form. This expression includes “a cheque in the electronic form” and “a truncated cheque”. WHAT IS AN E-CHEQUE? Electronic cheque (e-cheque) is the image of a normal paper cheque generated, written and signed in a secure system using digital signature and asymmetric crypto system. An electronic cheque is nothing more than an ordinary cheque produced on a computer system and instead of signing it in ink, it is signed using the digital equivalent of ink. After the coming into force of The Negotiable Instruments (Amendment And Miscellaneous Provisions) Act, 2002, legal recognition has been accorded to e-cheques and they have been brought at par with the normal cheques. Now, a ‘cheque’ includes an echeque. SECTION 138 Section 138 Negotiable Instruments Act comes into force for Dishonour of cheque for insufficiency, etc., of funds in the account: The Section states: Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid, either because of the amount of money standing to the...
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...In India, there is reason to believe that instrument to exchange were in use from early times and we find that papers representing money were introducing into the country by one of the Mohammedan sovereigns of Delhi in the early part of the fourtheenth century. The word 'hundi', a generic term used to denote instruments of exchange in vernacular is derived from the Sanskrit root 'hund' meaning 'to collect' and well expresses the purpose to which instruments were utilised in their origin. With the advent of British rule in India commercial activities increased to a great extent. The growing demands for money could not be met be mere supply of coins; and the instrument of credit took the function of money which they represented. Before the enactment of the Negotiable Instrument Act, 1881, the law of negotiable instruments as prevalent in England was applied by the Courts in India when any question relating to such instruments arose between Europeans. When then parties were Hindu or Mohammedans, their personal law was held to apply. Though neither the law books of Hindu nor those of Mohammedans contain any reference to negotiable instruments as such, the customs prevailing among the merchants of the respective community were recognised by the courts and applied to the transactions among them. During the course of time there had developed in the country a strong body of usage relating to “hundis”, which even the Legislature could not without hardship to Indian bankers and merchants...
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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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...of civil law. It governs and regulates the trade and commerce in the country. Mercantile law deals with the needs of a business man. This include laws relating to insurance, partnerships, contracts, companies, negotiable instruments, arbitration, carriage of goods etc. Mercantile laws in India is taken from the English law. So it follows the English laws to a considerable extent with some modifications and reservations to suite with the Indian conditions and practices. Following are the main source of the Indian mercantile laws: 1. English Mercantile Law: English laws which developed and come into existence through the customs and usage of traders and merchants in England is the main source of the Indian Mercantile laws. These customs and usages of controlled the merchants in their dealings with each other. It is also known as the Common Law. It is unwritten and are based on customs, precedents and usages. The law of contracts is a part of Common law in England. It is one of the most important part of Mercantile law. 2. Indian Statute Law: Another main source of Indian Mercantile law is the Acts passed by the Indian Legislature. Indian Contract Act 1872, The Sale of Goods Act 1930, The negotiable Instrument Act 1881, The companies Act 1953 are some of the Acts passed by the Indian Legislature. 3. Judicial Decisions: Another important source of mercantile laws are the Judicial decisions of the Courts. Disputes settled by the courts earlier have persuasive and guiding...
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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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...commitments to individual customers outlined in Bankers’ Fair Practice Code of Indian Banks’ Association. The document recognizes the rights of small depositors & benefit of customers. This document is a broad framework. The detailed operational guidelines on different aspects will be issued from time to time. A.1 (i) (ii) GENERAL : The legal relationship between a banker and its customer, so far as bills are concerned is that of an agent and principal respectively. A Bill of Exchange is an instrument in writing, containing an unconditional order, signed by the maker (drawer), directing a certain person (drawee) to pay a certain sum of money only to a certain person (Payee) or to his order or bearer. Further, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. As per the above description, cheques and hundies will be treated as bills of exchange. A bill of exchange involves three parties, viz. the drawer, drawee and payee. Banks act as collecting...
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...in commercial and industrial enterprises. Course Contents Module I: Indian Contract Act, 1872 Nature and kinds of Contracts, Concepts related to offer, Acceptance and Consideration, Principles Governing Capacity of Parties and Free Consent, Legality of Objects, Performance and Discharge of Contract, Breach of Contract and its Remedies,Special contracts of Bailment and Pledge, Indemnity and Guaratnee, Contract of Agency. Module II: Sale of Goods Act, 1930 Sale and Agreement to Sell, Hire Purchase – Pledge – Mortgage – Hypothecation Lease.Goods – Different types of Goods, Passing of Property in Goods, Conditions and Warranties, Doctrine of Caveat emptor, Rights of an unpaid Seller. Module III : Negotiable Instruments Act, 1881 Meaning of Negotiability and Negotiable Instruments – Cheques Bill of Exchange and Promissory Note – Crossing of Cheques – Endorsement – Dishonour of Cheques. Module VI: Company Law Companies Act, 1956-Meaning and types of companies, Formation of a company, Memorandum and Articles of Association, Share Capital and Shareholders, Prospectus and Issue of Shares, Buy Back of Shares, Debentures, Company Meetings and Proceedings, Powers, Duties, Liabilities of Directors and Winding up of Company. Module V: Indian Partnership Act, 1932 Meaning and definitions, Registration of partnerships, Types of partners, Dissolution, Limited Liability Partnership Act, 1932 – Meaning & definitions, Meaning of designated partner, Registration of LLP, Types...
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...Assignment Topic: Laws that Affecting Business Name: Sumon Roy ID: 4050 MBA (Evening Program) Department of International Business University of Dhaka Submission Date: Saturday, 17th May 2010. Table of Contents: Contents | Page | Introduction | 1 | Definition of Business, Law & Business Law | 2 | Sources of law | 3 | Different laws affecting business | 6-11 | Laws regarding commerce in Bangladesh | 12 | Laws regarding Industry in Bangladesh | 13 | Conclusion | 14 | Introduction: In the present world business plays an important role in every sphere of life. Business determines one’s life style, standard of living, education and even cultural standard. So to lead a bette-r life we need to understand business and study business. Business is dynamic – always changing. Coping with both predictable and unpredictable events can be easier, more efficient, and less traumatic if we understand business. Study of business will help us to understand that today national economies are no more independent entities rather interdependent and taking an uniform global shape, economic depression in U.S.A. has an impact on the whole world, business and global warming are not different issues, war in Iraq or Afghanistan has some kind of link with business, China becoming a factor in the world economy because of excellent business skill and the system known as “Free Enterprise”. However the road to success will be easier for those who understand how business...
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...civil law. It governs and regulates the trade and commerce in the country. Mercantile law deals with the needs of a business man. This includes laws relating to insurance, partnerships, contracts, companies, negotiable instruments, arbitration, carriage of goods etc. A mercantile law in Pakistan is taken from the English law. So it follows the English laws to a considerable extent with some modifications and reservations to suite with the Indian conditions and practices. Following are the main source of the Pakistan’s mercantile laws: 1. English Mercantile Law: An English law which developed and come into existence through the customs and usage of traders and merchants in England is the main source of the Indian Mercantile laws. These customs and usages of controlled the merchants in their dealings with each other. It is also known as the Common Law. It is unwritten and are based on customs, precedents and usages. The law of contracts is a part of Common law in England. It is one of the most important parts of mercantile law. 2. Indian Statute Law: Another main source of Indian Mercantile law is the Acts passed by the Indian Legislature. Pakistan Contract Act 1872, The Sale of Goods Act 1930, The negotiable Instrument Act 1881, The companies Act 1953 are some of the Acts passed by the Indian Legislature. 3. Judicial Decisions: Another important source of mercantile laws is the judicial decisions of the Courts. Disputes settled by the courts earlier have persuasive and guiding...
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...1. Introduction 1.1 From the dawn of human civilization, we, human being are directly or indirectly dependent to each other. For our better living, we created family, then formed group/society, then country and international community. Each individual, each family, each group and each country are dependent on each other by some means. For the easy exchange of dependency, people introduced business. “Business is defined as the exchange of goods, services or money for mutual benefit or profit.” (Skinner and Ivanncevich, 1992, p.8) The organizations that involve in profit making activities are called business organizations. Business may be trade, commerce or industry. To make business organized, it must be governed by some rules and regulations which we call business laws. Each country has independent business laws. Business organizations must operate within the boundaries of laws and government regulations. 1.2 Laws have been developed not only to protect consumers but also to preserve competition. Government agencies enforce these laws at the federal, state, and local levels. Business firms that do not comply with the laws face fines and other penalties. 2. Aim The aim of this assignment is to give a general idea regarding the laws that affect business. 3. Scope In this assignment I have limited my focus on the laws of Bangladesh that affect business. However, I have also focused on some of the laws of USA, UK and India those affect business but not yet clearly...
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...to conduct a financial transaction with intent to avoid a reporting requirement under this act. 3.to do or to do attempt to do such activities as the illegitimate source or the money or property may be concealed or disguised or knowingly assist to perform or to conspire to perform such activities. 1.banks 2.financial institution 3.insurence companies 4.money changer 5.companies or organizations remitting or transferring money 6.other organizations running business with the approval of Bangladesh bank 7.such other organizations as may be declared by bb with the approval of government by notification in the official gazette from time to time 8.high court division means the high court division of supreme court 9.suspisus or unseal transaction means A. that substantially deviates from the usual transaction B. that have reasonable cause to suspect that the transaction have involvement with any proceeds of crime. C. property means- any kinds of asset , whether tangible or intangible moveable or immovable Cash, documents , or instrument in any from including electronic or digital which indicates evidential title to, or interest in such asset. MLPA 2) Punishment for violation of freezing or attachment order: Punishment for violation of freezing or to attachment order-any person who contravenes an order of attachment of freezing and account may be made under this act shall be punished with imprisonment a tram which may extend to 1 year or with fine which which...
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...breach of warranty, unless provided for otherwise in the contract. d. Obstructs or prevents the other party from fulfilling his part of promise. e. All of the above. 2. Which of the following statements is correct? a. An agreement with or by the minor is void and inoperative. b. A contract entered by the guardian for the beneficiary of a minor is not valid. c. A minor by misrepresenting his age can enter into a valid contract. d. A minor can create contractual obligations as a partner. e. A minor can ratify all invalid acts as valid on attaining majority at any time. 3. Which of the following will amount to material alteration of a cheque? a. When the holder crosses an uncrossed cheque. b. When the holder converts general crossing into special crossing by adding the name of the banker on he face of the cheque. c. When the holder converts special crossing into general crossing by erasing the name of the banker in the cheque. d. When the holder adds the word “Not negotiable.” e. When a banker crosses an uncrossed cheque or converts a general or special crossing to another banker or to himself. 4. The right of transfer may be denied in case of private companies as? a. The company may not refuse to register the transfer or transmission by operation of law. b. The company may not refuse to register the transfer by virtue of power...
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...warranty, unless provided for otherwise in the contract. d. Obstructs or prevents the other party from fulfilling his part of promise. e. All of the above. 2. Which of the following statements is correct? a. An agreement with or by the minor is void and inoperative. b. A contract entered by the guardian for the beneficiary of a minor is not valid. c. A minor by misrepresenting his age can enter into a valid contract. d. A minor can create contractual obligations as a partner. e. A minor can ratify all invalid acts as valid on attaining majority at any time. 3. Which of the following will amount to material alteration of a cheque? a. When the holder crosses an uncrossed cheque. b. When the holder converts general crossing into special crossing by adding the name of the banker on he face of the cheque. c. When the holder converts special crossing into general crossing by erasing the name of the banker in the cheque. d. When the holder adds the word “Not negotiable.” e. When a banker crosses an uncrossed cheque or converts a general or special crossing to another...
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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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