Key Sections, Definitions & Provisions under the Negotiable instrument Act 1881
The Negotiable Instruments Act, 1881 provides a robust legal framework that safeguards both banks and customers during transactions involving cheques, bills of exchange, and promissory notes. Its provisions ensure trust, reliability, and legal recourse in case of disputes, making it a cornerstone of the Indian banking system. Purpose of the Act The primary intent of…
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What is the meaning of material alteration in a cheque?
Any alteration in the original state of a cheque such as date, amount, payee’s name, changing the word ‘order’ to bearer appearing after payee’s name or in endorsement is called material alteration. All material alteration must have drawer’s approval with his full signature (not initials) where the alterations are made. One of the mandatory features of…
Read article Drawer and Acceptor of Negotiable Instruments
Negotiable Instrument Fundamentals A negotiable instrument is a written and signed document that promises or orders payment of a specific sum of money, either on demand or at a future date, to a designated person or to the bearer. Examples include cheques, bills of exchange, and promissory notes. These instruments are transferable, allowing for change…
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The Negotiable Instruments Act, 1881 – An Overview
The Negotiable Instruments Act, 1881 is a landmark Indian law that laid the foundation for the legal framework governing financial documents such as promissory notes, bills of exchange, and cheques. Enacted during the British era, the Act was designed to bring uniformity, certainty, and trust to commercial transactions by standardizing the rules around the use…
Read article Negotiable Instrument Act and negotiable instruments
The Negotiable Instrument Act, of 1881 was enacted on 9th December 1881 to define and amend the law relating to Negotiable Instruments i.e. Promissory Notes, Bills of Exchange, and Cheque. The act came into force on the first day of March 1882. The Act extends to the whole of India but nothing herein contained affects…
Liability of the Paying Bank – Section 31
According to Section 19. of the NI Act 1889, A promissory note or bill of exchange, in which no time for payment is specified, and a cheque, are payable on demand. Section 31 of the Negotiable Instruments Act, 1881 covers the liability of the drawee of a cheque. The section states that the drawee of…
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