Definition of a Cheque
A cheque is defined in section 6 of Negotiable Instruments acts 1881 which provides that, “A cheque is a bill of exchange, drawn on a specified banker and expressed to be payable otherwise than on demand”. The electronic image of a truncated cheque and a cheque in the electronic form (e-cheque) are also termed as ‘cheque’ after coming into…
Read article Difference between Hundi and Hawala
(The similarities in usage of Hundis in India and Hawala system prevalent in the Middle East and North African countries are discussed in this post) Hundis have been in usage in India from ancient times but usages are not uniform and they are different at different places. Being a part of the informal system, Hundi…
Read article What are the types of ‘Bills of Exchange’ used in trade?
Demand bills, Usance bills, clean bills, Documentary Bills, Accommodation bills, Hundis etc. are a different kind of bills of exchange in usage for different types of trade transactions. A cheque is also a kind of bill of exchange. However, cheque has some peculiarities from other bills of exchange. If a bill of exchange drawn or made…
Read article Definition of Promissory Note
Section 4 of NI Act 1881 states that “ A promissory note is an instrument in writing (not being a bank note or 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…
Read article Who are the parties to a negotiable instrument?
Meanings of maker/drawer, drawee, payee, holder, holder in due course, endorser, endorsee, endorsement, drawee in the case of need, Acceptor for honour, who are parties to a negotiable instrument is explained below. Maker/drawer: the person who makes or executes the note promising to pay the amount stated therein. Drawee: The person directed to pay the…
What is the difference between Bills of Exchange and Promissory Note?
A promissory note or bill of exchange or cheque payables either to the order or bearer are deemed as the instruments under negotiable instrument acts of 1881. The promissory note is actually an undertaking from the debtor to pay a certain sum of amount to the creditor or to his order. The bill of exchange…
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