Скачать или смотреть U5| Negotiable Instruments 1881: Promissory Notes, Bills of Exchange, & Cheques - Contract Law II

This video provides a comprehensive overview of Negotiable Instruments (NIs) as defined under the Negotiable Instruments Act, 1881. We explore the definitions, essential characteristics, and key differences between the three main types of negotiable instruments: Promissory Notes, Bills of Exchange, and Cheques.
Key Concepts Covered:
A negotiable instrument is literally defined as a written document transferable by delivery, creating a right in favor of some person. According to Section 13 of the Negotiable Instruments Act, NIs include a promissory note, bill of exchange, or cheque, payable either to order or to bearer.
We delve into the essential features that set NIs apart from other chattels:
• Easy Negotiability: They are transferable from one person to another, usually by endorsement or delivery.
• Transferee Rights: The transferee can sue on the instrument in their own name without needing to give notice to the debtor.
• Better Title: A bona fide transferee for value (holder in due course) gets the instrument "free from all defects," meaning they are not affected by any prior defects in the transferor's title, bypassing the general rule that 'nobody can transfer a better title than that of his own'.
• Legal Presumptions: Sections 118 and 119 lay down certain presumptions, such as that the instrument was made for consideration and that the holder is a holder in due course.
Instruments Defined:
1. Promissory Note (PN): An instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money. The maker's liability is primary and absolute.
2. Bill of Exchange (BOE): An instrument in writing containing an unconditional order, signed by the maker, directing a certain person (the drawee) to pay a certain sum of money. The liability of the drawer is secondary and conditional.
3. Cheque: A bill of exchange drawn on a specified banker, which is always payable on demand. We also discuss the differences between cheques and bills of exchange, such as the requirement for stamping (cheques do not require stamps, while bills of exchange must be properly stamped).
Important Regulatory Note: Restrictions exist on instruments being "payable to bearer," particularly regarding Promissory Notes and Bills of Exchange payable to bearer on demand, enforced by Section 31 of the Reserve Bank of India Act, 1934, to prevent infringement on the RBI’s monopoly of note issue.
We also touch upon other examples of negotiable instruments, such as Treasury bills and Government promissory notes, and discuss traditional Indian instruments known as Hundis.