Bills of exchange and promissory note - class-XI

A negotiable instrument must bear the signature of its maker. Without the signature of the drawer or the maker, the instrument shall not be a valid one. ... Any negotiable instrument like a cheque or a promissory note is not complete till it is delivered to its payee.

A Promissory Note must always be written by hand. It must include all the mandatory elements such as the legal names of the payee and maker's name, amount being loaned / to be repaid, full terms of the agreement and the full amount of liability, beside other elements.

The drawer issues the promissory note and promises to pay a certain amount to the drawee (payee). He is also called the promisor. The drawer of a promissory note can theoretically consist of 2 or more parties.

Negotiable instrument must be freely transferable from one party to another party: negotiable instruments are easily and freely transferable. There are no formalities or much paperwork involved in such a transfer. The ownership of an instrument can transfer simply by delivery or by a valid endorsement.

Time of Payment must be Certain: If the order is to pay when convenient then such an order is not a negotiable instrument. Payee also must be certain: The person to whom the payment is to be made must be a specific person or persons. Also, there can be more than one payee for a negotiable instrument.

 It held that the promissory executed in other State was liable for stamp duty in the State where it was produced, and for not paying necessary stamp duty, the document would be inadmissible. For such a contingency Section 19 of the Indian Stamp Act would apply.

A promissory note is an instrument signed by the maker to pay a certain sum. It does not require acceptance by the payee, unlike a bill of exchange.

A promissory note must be for a definite, certain sum of money. Including 'sundry charges' makes the total amount uncertain, rendering the note invalid.

The person who signs the back of a cheque or instrument to transfer their rights is legally defined as the endorser.

The person who makes the promise to pay in a promissory note is called the maker or the promisor.

Maker or Drawer is the person who makes or draws the promissory note to pay a certain amount as specified in the promissory note. He is also called the promisor.

The sum should be payable to a certain person. There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not payable to the bearer. The liability of the maker is primary and absolute.

The person to whom the promise to pay a sum of amount is made is called promisee. He is the person in whose favor the promissory note is drawn.

In the context of a cheque, the bank that is directed to pay the money is the drawee.

Fixed deposit accounts are investment vehicles where money is locked for a specific term. They do not provide cheque book facilities, which are reserved for current or savings accounts.

Some key features of promissory notes are as follows,

• It must be in writing
• It must contain an unconditional promise to pay.
• The sum payable must be certain.
• The promissory notes must be signed by the maker.
• It must be payable to a certain person,cannot be made payable to the bearer.
• It should be properly stamped.

According to Negotiable Instruments Act,  1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note :

There are two parties to a promissory note:

According to the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. The following are the features of a promissory note:

According to the Negotiable Instruments Act, 1881, a promissory note is defined as 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 the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. Therefore, a promissory note cannot be made payable to the bearer.

When there is a discrepancy between the amount in words and the amount in figures, the amount in words prevails. Therefore, the note is valid for 100.

According to section 4 of the Negotiable Instruments Act, 1881, a promissory note is defined as an instrument in writing, containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person, or to the bearer of the instrument. However, according to the Reserve Bank of India Act, a promissory note payable to bearer is illegal. 

A promissory note must be payable at a time that is certain to happen. Marriage is a contingent event, making the time of payment uncertain.

 There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee.The sum should be payable to a certain person. It is not transferable and thus, the amount is not payable to the bearer.

 The sum should be payable to a certain person. There are only two parties to a Promissory Note, one is the maker or the payer and another one is the payee. It is not transferable and thus, the amount is not payable to the bearer.

A core requirement of a valid promissory note is that the promise to pay must be unconditional.

A promissory note must be for a definite sum of money. Certainty of the amount is a fundamental legal requirement.

Promissory notes are made by the debtor and do not require the creditor's acceptance to be valid.

Only (i) is unconditional and for a certain amount. (ii) involves a deduction (uncertainty), and (iii) is conditional on D's death and D's estate value.

In negotiable instruments law, the expression after sight means that a promissory note or bill of exchange must be presented to the maker or drawee for sight or acceptance before payment can be demanded and the maturity period begins.

Under the Negotiable Instruments Act, a cheque must be presented within its validity period, which is currently three months in India, or six months as per older statutory references often cited in textbooks.

A cheque is specifically drawn on a bank, whereas a bill of exchange is a more general instrument that can be drawn on any person, including a bank.

All listed options (unconditional order, specified bank, amount in figures/words) are standard features of a cheque. Therefore, none of the options are 'not' a feature.

Crossing a cheque does not affect its negotiability (it can still be transferred), but it restricts the mode of payment by requiring it to be deposited into a bank account rather than paid over the counter.

Bearer, Order, and Crossed cheques are standard legal classifications under the Negotiable Instruments Act. A 'blank cheque' is a colloquial term for a signed cheque without an amount, not a formal legal category of cheque.

According to Section 6 of the Negotiable Instruments Act, 1881, a cheque is defined as a bill of exchange drawn on a specified banker and payable on demand.

A cheque must be an unconditional order to pay a certain sum of money to a specified person or the bearer, signed by the drawer.

A cheque is always payable on demand. Therefore, no days of grace are allowed to the banker for payment. In case of a bill of exchange, the drawee is entitled to have three days for making payment of the bill and these extra days are known as grace days.

According to Section 6, of the Negotiable Instruments Act, 1881, the term cheque is defined as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.”

The Negotiable Instruments (Amendment) Act, 2002, introduced the concept of an electronic cheque, which is a cheque drawn in electronic form.

Section 6 of the Negotiable Instruments Act explicitly includes electronic images of truncated cheques and cheques in electronic form within the definition of a cheque.

By definition, a cheque is always payable on demand, unlike a bill of exchange which may be payable at a future date.

A cheque is a specific type of bill of exchange drawn on a specified banker and is always payable on demand. It is not a promissory note, which is an unconditional promise to pay.

The words 'not negotiable' on a crossed cheque do not restrict the transferability of the cheque; they merely prevent the holder from having a better title than the transferor. Therefore, the cheque remains transferable.

Promissory notes and bills of exchange can be drawn payable on demand, on a specific future date, or after a certain period of time (usance).