Written document which create a right in favor of some person and which is freely transferable or It is a written promise or order to pay money which may be transferred from one person to another ID: 1029631
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1. NEGOTIABLE INSTRUMENTS
2. Negotiable- Transferable by delivery.Written document which create a right in favor of some person and which is freely transferable. orIt is a written promise or order to pay money which may be transferred from one person to another.NI are money/cash equivalents.Play an important role in the economy in settlement of debts and claims.
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13. Payee is the person whose name is written on the promissory note or bill of exchange or cheque.
14. In course of transfer of a promissory note by payee, the parties involved may be Endorser and Endorsee.The Endorser- Endorser is the person who endorses the note in favour of another personThe Endorsee- If the endorser adds a direction to pay the amount mentioned in the instrument to, the person so specified is called the ‘endorsee’ of the instrument.
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17. A bill of exchange is a written acknowledgement of debt, written by the creditor and accepted by the debtor.It is called a draft before its acceptance.
18. Example :‘A’ sold goods to ‘B’ on credit for Rs. 20,000 for three months. If agreed so, ‘A’ can draw for a bill of exchange upon ‘B’ for Rs.20,000 payable after 3 months. Before it is accepted by ‘B’ it will be called a draft. It will become a bill of exchange only when ‘B’ writes the word “accepted” on it and puts his signature to communicate the acceptance.
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