Sociology | Mercantile Law | International Law | International Relations
Negotiable Instrument: More Topics
Who is a Drawer & a Drawee?
The marker of a bill of exchange or cheque is called the “drawer”. Whereas, the person thereby directed to pay is called the “drawee.”
Who is a Holder?
The “holder” of a negotiable instrument is the payee or endorsee who is in possession of it or the bearer thereof but does not include a beneficial owner.
Explanation
Where the note, bill or cheque is lost and not found again, or is destroyed, the person in possession of it or the bearer thereof. At the time of such loss or destruction shall be deemed to continue to be its holder.
Who is Holder in Due Course?
“Holder in due course” means any person who for consideration becomes the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee, if payable to order, before it became overdue, without notice that the title of the person from whom he derived his own title was defective.
Define ‘Payment in Due Course’
“Payment in due course” ‘means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned.
What is Inland Instrument?
A promissory note, bill of exchange or cheque drawn or made in Pakistan and made payable in, or drawn upon any person resident in, Pakistan shall be deemed to be an inland instrument.
Definition of Foreign Instrument
Any such instrument not so drawn, made or made payable shall be deemed to be foreign instrument.
What is Negotiation?
When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiable.
Define Endorsement and Who is Endorser?
When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for the purpose of negotiable, on the back or face thereof or on a slip of paper annexed thereto, or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to endorse the same, and is called the “endorser”.
Types of Endorsement
Endorsement “in blank”
If the endorser signs his name only, the endorsement is said to be “in blank”,
Endorsement “in full”
If the endorser adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person, the endorsement is said to be ‘in full”, and the person so specified is called the “endorsee” of the instrument.
Define Ambiguous Instrument
Where an instrument may be construed either as a promissory note or bill of exchange, the holder may at his election treat it as either and the instrument shall be then certificate re-forward treated accordingly.
What are Instruments Payable on Demand?
A promissory note or bill of exchange is payable on demand where:
- It is expressed to be so, or to be payable at sight or on presentment
- No time for payment is specified in it
- The note or bill accepted or endorsed after it is overdue, as regards the person accepting or endorsing it