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NEGOTIABLE INSTRUMENT
It is an instrument in writing, that contains the signature of the
maker or drawer; an unconditional promise or order to pay a
certain sum in cash that is payable either upon demand or at a
specifically designated time to the order of a designated person
or to its bearer.
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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PRESENTMENT OF NEGOTIABLE INSTRUMENT
• The process of presenting or placing the instrument before
the maker, acceptor or drawee is known as a ‘presentment of
Negotiable Instrument’.
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Boston office3rd Avenue west side , 1000 / 102
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ACCEPTANCE
Acceptance means acknowledgement of the sum mentioned in
a bill by the drawee or any other person on his behalf.
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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ESSENTIALS OF A VALID ACCEPTNACE
Following are the essentials of a valid acceptance:
• It must be in writing.
• It must be signed by the drawee or his agent.
• It must appear on the bill.
• The acceptance bill must be delivered to the holder.
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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PRESENTMENT FOR ACCEPTANCE
• Applicable only for bill of exchange but in case of
payable on demand or payable on fixed time need not
be presented for acceptance.
Acceptance of BOE is necessary in following cases:
• When BOE is payable after sight.
• Where there is an express stipulation.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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When it is not necessary for bill to present for acceptance still
holder may choose to present it for acceptance
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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TO WHOM PRESENTMENT CAN BE MADE
• The drawee of the bill.
• All the drawees.
• Official receiver of an insolvent drawee.
• The authorized agent.
• The acceptor of honor.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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TIME AND PLACE OF PRESENTMENT
• Business day within business hours.
• Within reasonable time if no time is specified.
• Within that period specified in the bill.
• At a place that is specified in the bill.
• If no place is mentioned in the bill, it may be presented at
usual place of business of drawee or his residence.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
HOURS FOR PRESENTMENT
• Presentment must be made during the usual business hours
of business.
• PRESENTMENT OF CHEQUE: It must be presented within
banking hours.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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PRESENTMENT FOR SIGHT
• The expression after sight in the note means that payment is
not to be demanded till it has been shown to the maker.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
PRESENTMENT FOR PAYMENT
• Must be presented for payment before drawee, maker,
acceptor thereof by the holder or on the behalf of holder
therein provided.
• In default of such presentment, the other parties thereto are
not liable thereon to such holder.
• Presentment after date of sight: must be on date of maturity
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
• ON DEMAND INSTRUMENT: Must be presented in a
reasonable time after it is received by holder.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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DISHONOUR OF BILL
DISHONOUR BY NON ACCEPTANCE
• Failure of a drawee to accept a duly presented and valid bill
of exchange.
OR
• When drawee or one of several drawees make default to
accept the bill of exchange.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
For example
Mr.A gave a cheque to Mr.B and the date written on it was 16th
Nov. MR.B took this cheque to bank on 16th NOV but bank
didn't accept this cheque although it was presented to bank but
still it was refuse by bank to accept it, so this cheque is said to
be dishonour by non acceptance.
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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• When the drawee is incompetent to contract then bill may be
treated as dishonoured.
For example
• If a person is insolvent
• Age
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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DISHONOR BY NON PAYMENT
• Failure of a drawee to pay a valid bill of exchange on its due
date.
• This failure gives the drawer the legal right to start a court
action called protest..
OR
• When maker of the note ,acceptor of the bill ,or drawee of
cheque makes default in payment..
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
FOR EXAMPLE
Mr.A purchased fans from Mr.B and sign a note that Mr. A will
give Mr.B remaining money after 3 months but after 3 months
he refuse to give Mr.B the remaining money this mean
dishonour by non payment.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
NOTING
SECTION 99
Promissory note or bill of exchange has been dishonoured
(non-acceptance or non payment)
The holder should get the instrument ‘noted’ by a notary
public.
Must specify the date of dishonour,
The reason (why the holder treats it as dishonoured)
The notary’s charges.
“Noting” must be made within a reasonable time after
dishonour.
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New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
PROTEST
SECTION 100
When a promissory note or a bill or exchange has been
dishonoured by non acceptance or non payment, the holder
may, within a reasonable time, cause such dishonour to be
noted and certified by a notary public. Such certificate is called
a protest.
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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CONTENTS OF PROTEST
SECTION 101
1)The instrument and of everything written or printed thereupon
2)The name of the person for whom and against the instrument
has been protested
3)A statement that payment or acceptance, or better security, as
the case may be, has been demanded of such person by the
notary public;
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Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
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4) When the note or bill has been dishonored, the place and
time of dishonor, and, when better security has been refused,
the place and time of refusal;
5) The subscription of the notary public making the protest;
6) In the event of an acceptance for honor or of a payment for
honor, the name of the person by whom, of the person whom,
and the manner in which, such acceptance or payment was
offered and effected.
New York OfficeHobes Boulevard, 689 / 1101
New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
PROTEST
Section 100 deals with “protest”. it says, “when a promissory note or bill
exchange has been dishonored by non-acceptance or non-payment.the
holder may , within a reasonable time, cause such dishonor to be noted and
certified by a notary public, such a certificate is called protest.
OR
A formal declaration whereby a person expresses a personal objection or
disapproval of an act. A written statement, made by a notary, at the request
of a holder of a bill or a note that describes the bill or note and declares that
on a certain day the instrument was presented for, and refused, payment.
New York OfficeHobes Boulevard, 689 / 1101
New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
PROTEST FOR BETTER SECURITY
When the acceptor of a bill of exchange has become insolvent ,
or his credit has been publically impeached, before the maturity
of the bill. The holder may ,within a reasonable time, cause a
notary public to demand better security for the acceptor and on
its being refused may, with in a reasonable time, cause such
facts to be noted and certified as aforesaid. such certificates are
called a protest for better security.
New York OfficeHobes Boulevard, 689 / 1101
New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656
SECTION 159
Protest is dispensed with by any circumstances which would
dispense with notice of dishonor. Delay in noting or protesting is
excused when delay is caused by circumstances beyond the
control of the holder and not imputable to his default,
misconduct or negligence. When the cause of delay ceases to
operate, the bill must be noted or protested with reasonable
diligence.
New York OfficeHobes Boulevard, 689 / 1101
New York - U.S
Boston office3rd Avenue west side , 1000 / 102
Boston - U.S
Toll Free : 08004004440Phone : 55 41 1432.5656