Negotiable Instruments:

Negotiable Instruments:

Negotiable Instruments act 1881 talks about 3 types.

I)                  Promissory Note => a) Promiser and b) Promisee

II)               Bill of Exchange => a) Drawer, b) Drawee and c) Payee

III)            Cheque

IFS CODE: Indian Financial System Code Number

The date on the cheque can be a back date or future date i.e. while writing a cheque if past date is put then it is called antidated.

While writing a cheque is future date is put then it is called post dated.

·        The period of 6months commences from the date which is appearing on the face of cheque.

Stale Cheque: A cheque for which 6 months period is lapsed is called stale cheque.

Cheques are basically of 2 types: a) Open cheques and b) Crossed Cheques

a)    Open cheque: A cheque which is not crossed is called open cheque. These are payable across counter. It is of two types

I)                  Bearer cheque: Banks pay bearer open cheques across counter with out insisting on identity of person

II)              Order cheque: It is payable to person name in cheque against identification of such person.

A cheque become payable to order in following base – the cheque is originally payable to order and the cheque is originally payable to bearer but the word bearer is “cut”.

è    A bearer cheque is negotiable by mear delivery

è    An ordre cheque is negotiable by endorsement and delivery.

b)    Crossed cheques: Crossing means drawing two transfer lines across the face of cheque.

Banks don’t pay cash for a crossed cheque across the counter, such cheques are to be collected through an account.

Crossed cheques are of two types –

I)                  General Crossing

II)               Special Crossing

In between the two transverse parallel line if a banks name is mentioned it is called special crossing, all other types of crossing are called general crossing.

Example: xyz gave a cheque in name of abc and crossed it a.c payee. Now abc wants to endorse cheque to mno is it permitted.

Ans: The amount of an a/c payee crossed cheque should credited to a/c of the payee of cheque it cant be endorsed further to any one.

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