A study of negotiable instruments in India

Abstract

The law relating to negotiable instruments is not the law of one country or of one nation, it is the law of the commercial world in general, for, it consists of certain principles of equity and usages of trade which general convenience and commonsense of justice had established to regulate the dealing of merchants and mariners in all the commercial countries of the civilised world. A negotiable instrument is in more than one sense a thing . The main object of the Negotiable Instruments Act is to legalize the system by which instruments contemplated by it could pass from hand to hand by negotiation like any other goods. A Negotiable Instrument is a document guaranteeing the payment of a specific amount of money, either on demand, or at a set time. According to the Negotiable Instruments Act, 1881 in India there are just three types of negotiable instruments i.e. promissory note, Bill of exchange and cheque. Cheque also includes Demand Draft. In the commonwealth almost all Jurisdictions have codified the law relating to negotiable instruments in a Bills of Exchange Act 1882 in the UK, Bills of Exchange Act. 1908 in New Zealand. The Negotiable Instrument Act 1881 in India and the Bills of Exchange Act 1914 in Mauritius. A negotiable instrument is one the property in which is acquired by any one who takes it bonafide and for value, notwithstanding any defect of title in the person from whom he took it, from which is follows that an instrument cannot be negotiable unless it is such and in such a state that the true owner could transfer the contract or engagement contained therein by simple delivery of the instrument. A negotiable instrument can be negotiated in two ways: (i) if the instrument is bearer instrument, the rights in it can be transferred by mere delivery from one person to another. When a negotiable instrument has been lost, or, has been obtained from any maker, acceptor, holder thereof by means of an offence or fraud, or for an unlawful consideration, no possessor or endorsee