NEGOTIABLE INSTRUMENTS ACT, 1881

Synopsis

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The N.I. Act, 1881 applies to the whole of India

including State of Jammu and Kashmir

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The N.I. Act, 1881 came into force on 1st March,

1882.

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The undertaking contained in a promissory note, to

pay a certain sum of money is Unconditional

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A bill of exchange contains an unconditional order.

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Cheque is a most popular kind of bill of exchange.

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The term "a cheque in the electronic form" is

defined in the N.I. Act, 1881 under explanation 1
(a) of section 6,.

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. The term Negotiable instrument' is defined in the

N.I. Act, 1881, under section 13.

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The term 'negotiation' in section 14 of the N.I. Act,

1881 refers to the transfer of a bill of exchange /
promissory note / cheque - to any person to
constitute the person as the holder thereof.

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If an instrument may be construed (interpreted)

either as a promissory note or bill of exchange then
it is an ambiguous instrument.

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If in an instrument the amount undertaken or

ordered to be paid is stated differently in figures
and in words as the amount stated in words shall be
the amount undertaken or ordered to be paid.

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Under section 16 of the N.I. Act, 'endorsement in

blank' of an instrument means, where the endorser
signs his name only on the instrument

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'At sight' under section 21 of the N.I. Act, 1881,

means on demand

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A promissory note or bill of exchange which is not

expressed to be payable on demand, at sight or on
presentment is at maturity on the 3rd day after the
day, on which it is expressed to be payable.

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If a minor draws, endorses, deliver or negotiates an

instrument, such instrument binds all parties to the
instrument except the mino.r

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. In a promissory note, the amount of money

payable must be certain.

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. An authority to draw bills of exchange does not

itself import an authority to endorse

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. The term 'legal representative' in section 29 of

the N.I. Act, 1881 includes executors or
administrator. (K. Subbanna v. K. Subbarayudu, AIR
1926 Mad 390)

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Drawer escape from his liability: A drawer can limit

or exclude his liability by inserting in the bill "an
express stipulation" to that effect.

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The legal representative cannot negotiate

"instrument by delivery only". He must re-endorse
and deliver the instrument for negotiating it.

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Public Holidays are excluded in determining

reasonable time for the purpose of payment of a
negotiable instrument

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The question of the reasonableness of the time for

presenting a bill of exchange for payment is a
mixed question of law and fact

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Under section 76(b) of the N.I. Act, 1881, the

engagement to pay must have been entered into
prior to mtaturity.

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A note under section 99 of the N.I. Act should also

contain "charges of Notary" along with other
things .

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The provisions of section 87 of the N.I. Act, 1881,

are subject to the provisions of sections 20, 49, 8 6
and 125 of the Act.

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