The Negotiable Instruments Act, 1881 - Quick Revision Sheet
Quick revision
Sections of the Act
| Section | Deals with |
|---|---|
| 4 | Promissory note |
| 5 | Bill of exchange |
| 6 | Cheque |
| 15 | Endorsement |
| 123 | General crossing |
| 124 | Special crossing |
Key terms
| Term | Meaning |
|---|---|
| Holder in due course | Takes the instrument in good faith and for value |
| Negotiability | Transfer with better title; no notice; consideration presumed |
| Assignability | Transfer of other property; defects pass on; notice needed |
| Allonge | Slip attached for further endorsements |
| Sans recourse | Endorser excludes his liability |
| Facultative | Endorser waives notice of dishonour |
| MICR | Magnetic Ink Character Recognition |
| IFSC | 11-character code; fifth character 0 |
Remember
- Act passed in 1881.
- Bill and cheque: three parties; promissory note: two.
- Three days of grace for time bills and promissory notes; none for cheques.
- A promissory note cannot be payable to bearer.
- Book key: a cheque becomes stale after 3 months.
- Emergency holiday: pay on the next working day.
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