Tamilnadu Samacheer Kalvi 12th Commerce Notes Chapter 22 The Negotiable Instruments Act, 1881 Notes
→ A negotiable instrument is a document which entitles a person to a certain sum of money and which is transferable from one person to another by mere delivery or by endorsement.
→ According to Section 13 of the Negotiable Instruments Act 1881, “a negotiable instrument means a promissory note, a bill of exchange or cheque payable either to order or to bearer”.
→ Negotiability refers to the transferability of all the rights and titles on an instrument by delivery or by endorsement and delivery.
→ Assignability refers to the transferability of personal properties and rights from one person to .another as gift or sale or security.
→ According to Section 5 of the Negotiable Instruments Act, “a bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument”.
→ According to Section 6 of the Negotiable Instruments Act, 1881 defines a cheque as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”.
→ According to Section 4 of the Negotiable Instruments Act 1881, “a promissory note is an instrument in writing containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of, a certain person or to the bearer of the instrument.
→ Crossing a cheque refers to the practice of drawing two parallel transverse lines across the face of a cheque with or without the words‘and Co’.
→ Crossing may be General crossing and Special crossing.
→ Special crossing may be of not negotiable crossing and Account payee crossing.
→ When the person signs on the back of the instrument with a view to transfer is known as endorsement.
→ Endorsement may be Endorsement in blank, Endorsement in full, conditional endorsement, restrictive endorsement, Sans recourse endorsement, Facultative endorsement and Partial endorsement.