Law reating to negotiable instrument
However, the debtor-creditor relationship is not the only relationship that exists between banks and customers; there are other relationships that are contractual in nature.
Change of signature, delegation of authority to sign and other sensitive conditions, 3. In this article, we will look at sections,and of the Negotiable Instruments Act, which offer details about these international laws.
Characteristics of negotiable instrument
Related Articles:. A cheque must be dated. Even though the notice is not in accordance with the rules pertaining to bills which are not foreign, this notice is sufficient. Barilux Nigeria Ltd Now the concept of a negotiable instrument has being established, the definition of cheques as a negotiable instrument; A cheque is a negotiable instrument instructing a financial institution to pay a specific amount of a specific currency from a specified transactional account held in the drawer's name with that institution bank. The holder of a negotiable instrument is called the holder in due course if he satisfies the following conditions: 1. The holder in due course is in a privileged position under the law and gets a good title to the instrument, even though the title of the transferor is defective.
The party in whose favor the bill is drawn or is payable is called the payee. Example: When a bill of exchange drawn by the seller on the buyer and is discounted with its banker, the latter can file a suit in its own name against the buyer or the drawee if he fails to pay on the due date.
A cheque drawn with a future date is valid but it is payable on and after the date specified.
A cheque may be payable to the bearer or to order but in either case it must be payable on demand. Related Interests.
Uses of negotiable instruments
In such cases, the law of the place where the negotiable instrument is payable determines the definition of dishonour. In such a circumstance, its subsequent acceptance or endorsement in India does not invalidate it. Modern day[ edit ] We prefer to carry a small piece of paper known as Cheque rather than carrying the currency worth the value of the Cheque. In this type of crossing, the collecting banker is supposed to credit the amount of the cheque to the account of the payee only. Agreements: Granting of an unqualified consent whether express or implied to the terms of a contract by the involved parties. He became the holder of the instrument before its maturity, i. To give written instruction to the bank if he seeks to withdraw his money. A bill of exchange may be endorsed by the payee in favour of a third party, who may in turn endorse it to a fourth, and so on indefinitely. There are five types of endorsements contemplated by the Code, covered in UCC Article 3, Sections — : An endorsement which purports to transfer the instrument to a specified person is a special endorsement — for example, "Pay to the order of Amy"; An endorsement by the payee or holder which does not contain any additional notation thus purporting to make the instrument payable to bearer is an endorsement in blank or blank endorsement ; An endorsement which purports to require that the funds be applied in a certain manner e.
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