A Negotiable Instrument means anything which is easily transferable from one person to another.
The Act provides a legal guarantee for the payment of a specific amount of money, either on demand or at a set time.
1. Promissory Note
A legal document in which one person promises to pay money to another person at a particular time.
- It is only between a Lender and a Borrower.
2. Bill of Exchange
A legal document in which one person (company or party) orders another person to pay money to a third person.
Drawer
Person who orders to pay money.
Drawee
The one who is ordered to pay.
Payee
Person in whose favour the bill is drawn.
3. Cheque
A cheque is also a bill of exchange in which one person orders the Bank to pay money to a third person.
4. Demand Draft (DD)
A prepaid financial instrument issued by a bank, directing another bank branch to pay a specific amount of money to a particular person or organisation.
When was the Negotiable Instruments Act passed?
Which party in a Bill of Exchange is the one 'ordered to pay'?
Which instrument is essentially a 'prepaid' order from one bank branch to another?
A Promissory Note is a legal agreement specifically between which two parties?