Thursday, July 13, 2006
Business Legislation Notes - Prof. Bijoy Kumar Dutta - Part 4
10th July, 2006 – Bijoy Kumar Dutta – Business Legislation
A NEGOTIABLE INSTRUMENT means a promissory note, bid of exchange or check, payable either through order or through bearer. These 3 kinds of instruments are recognised as negotiable instrument.
CHARACTERISTICS OF NEGOTIABLE INSTRUMENT
1) FREELY TRANSFERBLE – The property in a Negotiable Instrument passes from one person to another by delivery, if the instrument is payable to bearer by endorsed & delivery if the instrument is payable by order.
2) TITLE or HOLDER – Free from all defects a person taking an instrument bonafidely & for value is known as HOLDER in due course, gets the instrument free from all defects, in the title of the transfer.
3) RECOVERER – Holder in due course can sue upon a Negotiable Instrument in his hwn way for the recovery of their ********
4) PRESUMPTIONS –
a) CONSIDERATION – Every Negotiable Instrument is presumed to have been made, drawn, accepted, endorsed, negotiated or transferred for considerations.
b) DEBT – Every Negotiable Instrument bearing a debt is presumed to have been made or drawn on some date.
c) TIME OF ACCEPTANCE - When a minimum exchange is accepted, it is presumed that it was accepted within a presumary time of its debt & before it was accepted.
d) TIME OF TRANSFER – Every transfer of Negotiable Instrument is presumed to have been made before its maturity.
e) When an instrument is lost it is presumed that it was newly stamped.
f) Endorsement appearing upon an Negotiable Instrument are product to have been made in the order in which they appear thereon.
Section 4
PROMISSORY NOTE (Imp)
A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the mega to pay a certain sum of money only through order of a certain person or through the bearer of an instrument.
The person who makes the promise to pay is called the MAKER. The person who gets money is called the PAYEE.
Question
What are the ESSENTIAL ELEMENTS of a promissory note?
Answer
The Essential Elements are: -
1) The instrument must be in writing.
2) The instrument must be signed by the maker.
3) The instrument must contain a promise to pay – must be expressed & not implied.
4) The instrument must be unconditional.
5) The instrument must be stamped.
6) The sum of money to be paid must be certain.
7) The sum of money must be legal tender money of India & not a foreign currency.
8) Sum of money is payable to a definite person or to his order.
9) Sum of money is payable on demand or after a certain definite time.
AN EXAMPLE OF A PROMISSORY NOTE: -
On demand, I promise to pay Vaijayanta Chattoraj of 29A, RKA Lane, Kol-10. or order a sum of Rs 500/- (five hundred only) with interest @ 18% per annum, for value received in cash.
STAMP
Kalyan Kumar Sen
of Jeliapara Lane
Kolkata –12
10-7-2006
Problem
1) I promise to pay 7 days after D’s marriage.
A- A condition appears here, so not a Promissory Note.
2) I owe you Rs 100. Is it a promissory note?
A- It is an acknowledgement of indebtedness. It does not have the phrase that “I promise to pay”, so not a promissory note.
BILL OF EXCHANGE (VVV Imp)
A Bill of Exchange is or instrument in writing containing an unconditional order signed by the maker directly a certain person to pay certain sum of many only to or to the order of a certain person, or to the bearer of the instrument.
Section 5
The maker of the Bill of Exchange is called the DRAWER.
The person who is directed to pay is called the DRAWEE.
The person who will receive the money is called the PAYEE.
It is the holder’s duty to present the Bill of Exchange. The drawee signifies his acceptance by signing.
ESSENTIAL ELEMENTS OF BILL OF EXCHANGE (VVV Imp)
1) The instrument must be in writing.
2) The instrument must be signed by the drawer.
3) The instrument must contain an order to pay.
4) The drawer, drawee & payee must be certain.
5) The payment must be in legal tender money of India.
6) The payment must be payable to a definite person or according to his order.
7) The instrument must be stamped.
8) The payment must be payable on demand to the drawer after a definite period of time.
AN EXAMPLE OF A BILL OF EXCHANGE
Pay Vaijayanta Chattoraj of RKA Lane Kol-10 or order, the sum of Rs 10,000 (Rupees Ten Thousand only) for value received in cash.
Kalyan Kumar Sen
of Jeliapara Lane
Kol-12.
STAMP
10-7-2006
To Debasish Ghoshal
2, Jadunath Dey Road,
Kol-6
Accepted
D. Ghoshal.
(it is not possible if it isnot accepted here)
Problem
1) English Case
Please let the bearer have 7 pounds and oblige.
A- It is not a bill of exchange as it is a request & not an order.
Section 6
A check is a bill of exchange drawn upon a specified banker (drawee) on single document.
ESSENTIAL ELEMENTS
a) A check must fulfill all the essential requirements of a Bill of Exchange.
b) A check may be payable to bearer or order but in either case it must be payable on demand.
c) The banker named there must pay it when it is presented for payment to it during office hours provided the check is validly drawn and the drawer has sufficient funds to his credit.
d) The signature must tally with the specified signature kept in the bank.
e) The check must be dated.
f) Check becomes due of payment on the date specified on it.
g) The check drawn for a future date is quite valid.
h) A check must be presented as valid but after due date but the usual validity is 6 months.
Section 8
HOLDER (VVV Imp)
Holder of a Negotiable Instrument means any person entitled in his own name to the possession thereof & to receive or recover the amount due there from the parties there to, thus clerks or servants having the instrument in their custody are not holders as they are not entitled in their own name to rescue or recover the amount.
Section 9
HOLDER IN DUE COURSE
The holder of an Negotiable Instrument is called the holder in due course, till he satisfies the following criteria.
1) He obtained the instrument for valuable consideration.
2) He becomes holder before its maturity.
3) He had no cause to believe that any defect existed in the title of the person from whom he derived the instrument.
Question
What are the PRIVILEGES for a holder in due course?
A – The holder in due course enjoys the following privileges under the Negotiable Instrument Act.
1) He gets better title than that of transferor.
2) Privilege in case of incohed stamp instruments – A person who delivers the said instrument is precluded from asserting as against the holder in due course that the instrument has not been filled in accordance with his authority. The stamp being sufficient to cover the amount.
3) Liability of prior parties – Every prior party is liable to a holder in due course till the instrument is satisfied.
4) The acceptor of a bill of exchange cannot say as against the holder in due course, that the other parties to the bill of exchange were fictitious.
Section 8
HOLDER (VVV Imp)
Holder of a Negotiable Instrument means any person entitled in his own name to the possession thereof & to receive or recover the amount due there from the parties there to, thus clerks or servants having the instrument in their custody are not holders as they are not entitled in their own name to rescue or recover the amount.
Section 9
HOLDER IN DUE COURSE
The holder of an Negotiable Instrument is called the holder in due course, till he satisfies the following criteria.
1) He obtained the instrument for valuable consideration.
2) He becomes holder before its maturity.
3) He had no cause to believe that any defect existed in the title of the person from whom he derived the instrument.
Question
What are the PRIVILEGES for a holder in due course?
A – The holder in due course enjoys the following privileges under the Negotiable Instrument Act.
1) He gets better title than that of transferor.
2) Privilege in case of incohed stamp instruments – A person who delivers the said instrument is precluded from asserting as against the holder in due course that the instrument has not been filled in accordance with his authority. The stamp being sufficient to cover the amount.
3) Liability of prior parties – Every prior party is liable to a holder in due course till the instrument is satisfied.
4) The acceptor of a bill of exchange cannot say as against the holder in due course, that the other parties to the bill of exchange were fictitious.
A NEGOTIABLE INSTRUMENT means a promissory note, bid of exchange or check, payable either through order or through bearer. These 3 kinds of instruments are recognised as negotiable instrument.
CHARACTERISTICS OF NEGOTIABLE INSTRUMENT
1) FREELY TRANSFERBLE – The property in a Negotiable Instrument passes from one person to another by delivery, if the instrument is payable to bearer by endorsed & delivery if the instrument is payable by order.
2) TITLE or HOLDER – Free from all defects a person taking an instrument bonafidely & for value is known as HOLDER in due course, gets the instrument free from all defects, in the title of the transfer.
3) RECOVERER – Holder in due course can sue upon a Negotiable Instrument in his hwn way for the recovery of their ********
4) PRESUMPTIONS –
a) CONSIDERATION – Every Negotiable Instrument is presumed to have been made, drawn, accepted, endorsed, negotiated or transferred for considerations.
b) DEBT – Every Negotiable Instrument bearing a debt is presumed to have been made or drawn on some date.
c) TIME OF ACCEPTANCE - When a minimum exchange is accepted, it is presumed that it was accepted within a presumary time of its debt & before it was accepted.
d) TIME OF TRANSFER – Every transfer of Negotiable Instrument is presumed to have been made before its maturity.
e) When an instrument is lost it is presumed that it was newly stamped.
f) Endorsement appearing upon an Negotiable Instrument are product to have been made in the order in which they appear thereon.
Section 4
PROMISSORY NOTE (Imp)
A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking signed by the mega to pay a certain sum of money only through order of a certain person or through the bearer of an instrument.
The person who makes the promise to pay is called the MAKER. The person who gets money is called the PAYEE.
Question
What are the ESSENTIAL ELEMENTS of a promissory note?
Answer
The Essential Elements are: -
1) The instrument must be in writing.
2) The instrument must be signed by the maker.
3) The instrument must contain a promise to pay – must be expressed & not implied.
4) The instrument must be unconditional.
5) The instrument must be stamped.
6) The sum of money to be paid must be certain.
7) The sum of money must be legal tender money of India & not a foreign currency.
8) Sum of money is payable to a definite person or to his order.
9) Sum of money is payable on demand or after a certain definite time.
AN EXAMPLE OF A PROMISSORY NOTE: -
On demand, I promise to pay Vaijayanta Chattoraj of 29A, RKA Lane, Kol-10. or order a sum of Rs 500/- (five hundred only) with interest @ 18% per annum, for value received in cash.
STAMP
Kalyan Kumar Sen
of Jeliapara Lane
Kolkata –12
10-7-2006
Problem
1) I promise to pay 7 days after D’s marriage.
A- A condition appears here, so not a Promissory Note.
2) I owe you Rs 100. Is it a promissory note?
A- It is an acknowledgement of indebtedness. It does not have the phrase that “I promise to pay”, so not a promissory note.
BILL OF EXCHANGE (VVV Imp)
A Bill of Exchange is or instrument in writing containing an unconditional order signed by the maker directly a certain person to pay certain sum of many only to or to the order of a certain person, or to the bearer of the instrument.
Section 5
The maker of the Bill of Exchange is called the DRAWER.
The person who is directed to pay is called the DRAWEE.
The person who will receive the money is called the PAYEE.
It is the holder’s duty to present the Bill of Exchange. The drawee signifies his acceptance by signing.
ESSENTIAL ELEMENTS OF BILL OF EXCHANGE (VVV Imp)
1) The instrument must be in writing.
2) The instrument must be signed by the drawer.
3) The instrument must contain an order to pay.
4) The drawer, drawee & payee must be certain.
5) The payment must be in legal tender money of India.
6) The payment must be payable to a definite person or according to his order.
7) The instrument must be stamped.
8) The payment must be payable on demand to the drawer after a definite period of time.
AN EXAMPLE OF A BILL OF EXCHANGE
Pay Vaijayanta Chattoraj of RKA Lane Kol-10 or order, the sum of Rs 10,000 (Rupees Ten Thousand only) for value received in cash.
Kalyan Kumar Sen
of Jeliapara Lane
Kol-12.
STAMP
10-7-2006
To Debasish Ghoshal
2, Jadunath Dey Road,
Kol-6
Accepted
D. Ghoshal.
(it is not possible if it isnot accepted here)
Problem
1) English Case
Please let the bearer have 7 pounds and oblige.
A- It is not a bill of exchange as it is a request & not an order.
Section 6
A check is a bill of exchange drawn upon a specified banker (drawee) on single document.
ESSENTIAL ELEMENTS
a) A check must fulfill all the essential requirements of a Bill of Exchange.
b) A check may be payable to bearer or order but in either case it must be payable on demand.
c) The banker named there must pay it when it is presented for payment to it during office hours provided the check is validly drawn and the drawer has sufficient funds to his credit.
d) The signature must tally with the specified signature kept in the bank.
e) The check must be dated.
f) Check becomes due of payment on the date specified on it.
g) The check drawn for a future date is quite valid.
h) A check must be presented as valid but after due date but the usual validity is 6 months.
Section 8
HOLDER (VVV Imp)
Holder of a Negotiable Instrument means any person entitled in his own name to the possession thereof & to receive or recover the amount due there from the parties there to, thus clerks or servants having the instrument in their custody are not holders as they are not entitled in their own name to rescue or recover the amount.
Section 9
HOLDER IN DUE COURSE
The holder of an Negotiable Instrument is called the holder in due course, till he satisfies the following criteria.
1) He obtained the instrument for valuable consideration.
2) He becomes holder before its maturity.
3) He had no cause to believe that any defect existed in the title of the person from whom he derived the instrument.
Question
What are the PRIVILEGES for a holder in due course?
A – The holder in due course enjoys the following privileges under the Negotiable Instrument Act.
1) He gets better title than that of transferor.
2) Privilege in case of incohed stamp instruments – A person who delivers the said instrument is precluded from asserting as against the holder in due course that the instrument has not been filled in accordance with his authority. The stamp being sufficient to cover the amount.
3) Liability of prior parties – Every prior party is liable to a holder in due course till the instrument is satisfied.
4) The acceptor of a bill of exchange cannot say as against the holder in due course, that the other parties to the bill of exchange were fictitious.
Section 8
HOLDER (VVV Imp)
Holder of a Negotiable Instrument means any person entitled in his own name to the possession thereof & to receive or recover the amount due there from the parties there to, thus clerks or servants having the instrument in their custody are not holders as they are not entitled in their own name to rescue or recover the amount.
Section 9
HOLDER IN DUE COURSE
The holder of an Negotiable Instrument is called the holder in due course, till he satisfies the following criteria.
1) He obtained the instrument for valuable consideration.
2) He becomes holder before its maturity.
3) He had no cause to believe that any defect existed in the title of the person from whom he derived the instrument.
Question
What are the PRIVILEGES for a holder in due course?
A – The holder in due course enjoys the following privileges under the Negotiable Instrument Act.
1) He gets better title than that of transferor.
2) Privilege in case of incohed stamp instruments – A person who delivers the said instrument is precluded from asserting as against the holder in due course that the instrument has not been filled in accordance with his authority. The stamp being sufficient to cover the amount.
3) Liability of prior parties – Every prior party is liable to a holder in due course till the instrument is satisfied.
4) The acceptor of a bill of exchange cannot say as against the holder in due course, that the other parties to the bill of exchange were fictitious.
# posted by HOTWINTER @ 3:35 AM 
