Page 1 : egotiable Instruments Introduction Act, , , , A negotiable instrument is a piece of paper which entitles 4 person to a sum of money and which, is transferable from person to person by mere delivery or by endorsement and delivery. The, person to whom it is so transferred becomes entitled to the money also to the right to further, transfer it. Thus, negotiable instruments play a major role in the trade world,, , Purpose, , Main purpose of negotiable instruments js to avoid the carriage of higher amount of money and, to reducing the risk of theft; robbery etc., , To give legal effect to negotiable instruments there is legislation and the name of that legislation, is The Negotiable Instruments Act, 1881., , Introduction To Negotiable Instruments Act, 1881, , The Negotiable Instruments Act was enacted, in India, in 1881.Prior to its enactment, the, Provision of the English Negotiable Instrument Act were applicable in India, and the present Act, is also based on the English Act with certain modifications. It extends to the whole of India, except the State of J&K., , What are Negotiable Instruments?, , Documents of a certain type, used in commercial transactions and monetary dealings, are called, Negotiable instruments. The word ‘negotiable’ means transferable from one person to another and, the term 'instrument' means ‘any written doc. by which a right is created in favor of some person.’, Thus, the negotiable instrument is a doc. by which rights vested in a person can be transferred to, another person in accordance with the provisions of the Negotiable Instruments Act, 1881., , Definition:, According to section 13 of Negotiable Instruments Act, 1881- A ‘negotiable instrument! means a, , promissory note, bill of exchange or cheque payable either to order or to bearer., , Main Features of A Negotiable Instrument, , An instrument may be negotiable either by, Statute - Promissory notes, bills of exchange and cheques are negotiable instruments under the, , Negotiable Instruments Act, 1881; or, By usage - Bank notes, bank drafts, share warrants, bearer debentures, dividend warrants, scripts, , and treasury bills., An instrument is to be called ‘negotiable’ if it possesses the following characteristic features:, # Freely transferable - Transferability may be by, , 1. delivery, or, 2. By endorsement and delivery., , a. Holder's title free from defects: The holder (of the negotiable instrument) in due course, , acquires a good title not withstanding any defect in a previous holder's title., b. The Holder can sue in his own Name - Another characteristic feature of a negotiable