PRESENTATION ON

NI ACT, 1881

NEGOTIABLE INSTRUMENT ACT, 1881

DEFINITION: KINDS, FEATURES.
PROMISSORY NOTE, BILL OF EXCHAGE, CHEQUE
CHEQUE: DEFINITION,
SALIENT FEATURES OF A CHEQUE
MATERIAL PARTS OF A CHEQUE
TYPES OF CHEQUE
PARTIES TO CHEQUE
RIGHTS & OBLIGATIONS

Presented By:

AHSAN TARIQUR
SPO,BDBL,KARWAN BAZAR,
DHAKA

Negotiable Instruments

As per section 13 of NI Act, 1881, "a negotiable

instrument means a Promissory note, bill of
exchange or cheque payable either to order or to
bearer".

Simply, Negotiable Instrument means a written

document which creates a right in favour of some
persons and which can be transferred by mere
delivery or endorsement and delivery.

Features of a Negotiable Instrument

1.
2.
3.
4.

Easy Transferable:
Transfer, free from defects:
Right to sue:
Delivery essential:

PROMISSORY NOTE

See. 4 of the N. I. Act defines a

promissory note 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.'

Essential characteristics of a
promissory note

It must be in writing
It must contain an express promise to pay
The undertaking to pay must be
unconditional
It must be signed by the maker
The maker must be certain
The payee must be certain
The sum payable must be certain
Payment must be in legal money of the
country
It must be properly stamped as required by
the Stamp Act.

What is Cheque?
Section 6 of the NI Act, 1881 a
cheque is a bill of exchange drawn
on a specified banker and not
expressed to be payable otherwise
than on demand.

What is Bill of Exchange?

Section 5 of the NI Act, Bill of

Exchange is an instrument in writing
containing an unconditional order,
signed by the maker, directing a
certain person to pay [on demand or
at a fixed determinable future time]
a certain sum of money only to, or
to the order of, a certain person or
to the bearer of the instrument."

Salient Features of a Cheque:

Instrument in writing
An unconditional order
On a specified banker
Payee to be certain
A certain sum of money
Payable on demand
To be signed by the drawer

Material Parts of a cheque:

Date
Amount
Payee
Place
Crossing

Type of the cheque:

Open
Bearer
Order

Crossed

Material Alteration and Effects of Material

Alteration:
If any change/alteration appears to be taken
place in one of the material parts of the Cheque,
would be treated as it has been materially altered.
A bearer cheque may be altered by the payee into
an order cheque and this would not amount to a
material alteration. But the alteration of an order
cheque into a bearer cheque would amount to a
material alteration requiring authentication by the
drawer. In such case bank should insist upon the
authentication by the drawer before making
payment of the cheque. If it is not possible,
paying banker should dishonour the cheque.

Material Alteration and Effects of Material

Alteration:

Effects of material alteration ( Section-87 of

N.I. Act-1881) express as "Any material
alteration of a negotiable instrument
renders the same void as against any one
who is a party thereto at the time of
making such alteration and does not
consent thereto, unless it was made in
order to carry out the common intention of
the original party."

Specimen of Cheque: Bearer Cheque

MODERN BANK

SB/A 200101

Motijheel Branch, Dhaka

06.09.20
05

Pay to M/S Saleh Enterprise ~~~~~~~~~~~~~~

or bearer
Taka #Fifty ~thousand~only# ~~~~~~~~~~~
Taka =50,000/=

For Kamal Traders

Kamal
Proprietor

Specimen of Cheque: Order Cheque

MODERN BANK

SB/A 200101

Motijheel Branch, Dhaka

06.09.20
05

Pay to M/S Saleh Enterprise ~~~~~~~~~~~~~~

or order
Taka #Fifty ~thousand~only# ~~~~~~~~~~~
Taka =50,000/=

For Kamal Traders

Kamal
Proprietor

Order Cheque - Endorsement

Pay to Mr. Chalak Ali or

order
For Saleh Enterprise

Saleh

Proprietor

Specimen of Cheque: Crossed Cheque

MODERN BANK

SB/A 200101

Motijheel Branch, Dhaka

06.09.20
05

Pay to M/S Saleh Enterprise ~~~~~~~~~~~~~~

or bearer
Taka #Fifty ~thousand~only# ~~~~~~~~~~~
Taka =50,000/=

For Kamal Traders

Kamal
Proprietor

Parties to a cheque:

Drawer: The person who has

drawn the cheque is called the
Drawer.
Drawee: The banker on whom the
cheque is drawn by the drawer is
called the Drawee.
Payee: The person who is entitled
to receive the payment of a
cheque is called the Payee.

Parties to a cheque:
Drawee
SB/A 200101

MODERN BANK

Motijheel Branch, Dhaka

06.09.20
05

Pay to M/S Saleh Enterprise ~~~~~~~~~~~~~~

or bearer
Taka #Fifty ~thousand~only# ~~~~~~~~~~~
Payee

Taka =50,000/=

For Kamal Traders

Kamal
Proprietor

Drawer

Who is a Holder?
o

In case of bearer cheques, the

person in possession ( legal
possession) is the holder
In case of order cheques, the payee
of the cheques or endorsee is the
holder of the cheque.
(N.I. Act, Sec-8)

Rights of holder
"A holder may receive payment in
due course under a negotiable
instrument and further negotiate it
in a manner provided by this Act, he
may also sue on such instrument in
his own name.
( Section - 57-B of N.I. Act.-1881)

Liability of drawer
The drawer of a cheque by drawing
it, engages that in case of dishonour
by the drawee he will compensate
the holder"
( Section -30-b, N.I. Act.)

Liability of drawee of Cheque

"The drawee of a cheque having sufficient
funds of a drawer in his hands properly
applicable to the payment of such cheque
must pay the cheque when duly required
so to do, and, in default of such payment
must compensate the drawer for any loss
or damage by such default"
( Section 31 of N.I. Act.)

THANK YOU