2. DEFINITION
• Method of transferring a debt from one person
to another
• Means a
• promissory note
• Bill of Exchange
• Cheque
Payable either to order or bearer
3. CHARACTERISTICS
• Contract to pay
• Freely transferrable
• Can be transferred till maturity
• Possess the quality of negotiability
• Transferor need not give any notice liable to pay
the instrument
• Transferee can use it in his own name
• Good as cash
• Expects the holder to make prompt payment
• Capable of a proof as it has got special rules of
evidence
4. PROMISSORY NOTE
• It is an instrument in writing containing an
unconditional undertaking, signed by the maker
to pay a certain money only to certain person
• People involved
• Maker
• Payee
5. ESSENTIAL ELEMENTS
• Writing
• Promise to pay
• Definite and unconditional
• Signed by the maker
• Certain parties
• Certain sum of money
• Promise to pay money only
• Bank note or currency note is not a promissory
note
6. BILL OF EXCHANGE
• It is an instrument in writing containing an
unconditional order, signed by the maker to
certain person to pay certain sum of money .
• Parties to a bill of exchange
• Drawer
• Drawee
• Payee
7. ESSENTIAL ELEMENTS
• Writing
• Contain an order to pay
• Order must be unconditional
• Requires three parties
• Parties must be certain
• Signed by drawer
• Certain sum
• Contain an order to pay money
• Must have a stamp
8. CHEQUE
• A cheque is a bill of exchange drawn upon a
specified banker and payable on demand and it
includes the image of a truncated cheque in the
electronic form.
• Always drawn on a specified banker
• Always payable on demand
9. TYPES OF CHEQUE
• Two types of cheques are there
• Open cheque
• Crossed cheque
one in which two parallel lines
10. TYPES OF CROSSING
General crossing
Drawee bank shall not pay it unless it is
presented by a banker
Special crossing
the banker on whom it is drawn shall pay it
only to the banker on whom it is crossed or his
agent for collection