Types of Negotiable Instrument

According to Sec (13) of negotiable instrument act 1881, a negotiable instrument includes.

  • A bill of exchange.
  • A promissory note
  • A cheque.

Above three types of negotiable instrument are mentioned in the said section.

However of instrument to be treated as negotiable instrument.

  • If it is in such a form which entitles the holder to sue in his own name.
  • If it is transferable.

Examples:  

  • Bill of exchange.
  • Promissory notice.
  • Divident warrants.
  • Share warrants.
  • Bearer debentures
  • Bank drafts.
  • Railway receipts.

Documents which are not considered negotiable instruments:  

Following documents are not considered negotiable instruments:

  • Money orders.
  • Postal orders.
  • Deposit receipts.
  • Share certificate.
  • Bill of lading.
  • Fixed deposit.
  • Dock warrant.

Conditions:  

  • The instrument should be freely transferable.
  • The person who obtains it in good faith and for gets it free from all defects and is entitled to sue upon.

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