N.I. Act 1881
N.I. Act 1881
N.I. Act 1881
Negotiable Instruments
Essential Characteristics of
a Negotiable Instrument
Essential Characteristics of
a Negotiable Instrument
(Continued)
Definitions
A promissory note (pro-note or hand note) is an
instrument in writing (not being a bank note or a currency
note) containing an unconditional undertaking signed by
the maker, to pay a certain sum of money' only to, or to
order of a certain person, or to the bearer of the
instrument.
A bill of exchange is an instrument in writing containing an
unconditional order, signed by the maker, directing a
certain person to pay a certain some of money only to, or
to the order of a certain person or to the bearer of the
instrument.
A Cheque is a bill of exchange drawn upon a specified
banker and payable on demand.
Essential Elements of
a Promissory Note
1. The instrument must be (i) in writing, (ii) signed by the
maker and (iii) stamped.
2. The maker of the instrument must be certain and definite.
3. A signature in pencil or by a rubber stamp of facsimile is
good.
4. The instrument must contain a promise to pay.
5. The promise to pay must be unconditional.
6. The sum of money to be paid must be certain.
7. The payment must be in the legal tender money of
Bangladesh.
9. The money must be payable to a definite person or
according to his order.
10. A promissory note may be payable on demand or after a
certain definite period of time.
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Essential Elements of
a Bill of Exchange
1. The instrument must be (i) in writing, (ii) signed by the
drawer and (iii) stamped.
2. The instrument must contain an order to pay, which is
express and unconditional.
3. The drawer, drawee and the payee must be certain and
definite individuals.
4. The amount of money to be paid must be certain.
5. The payment must be in the legal tender money of
Bangladesh.
6. The money must be payable to a definite person or
according to his order.
7. The bill may be made payable on demand or after a
definite period of time.
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Distinction between
Bill of Exchange and Cheque
Distinction between
Bill of Exchange and Cheque
(Continued)
5. If a bank fails to pay a Cheque, it is not necessary to
give notice of dishonour to the drawer to make him liable
to compensate the payee. In the case of bills of
exchange, it is necessary to give notice of dishonour,
except in certain special cases.
6. A Cheque may be crossed; there is no provision for
crossing a bill.
7. The payment of a Cheque may be countermanded by
the drawer. The payment of a bill cannot be
countermanded.
8. A Cheque does not require any stamp. A bill of exchange
(except in certain cases) must be stamped.
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