Features of a Negotiable Instrument

1. It is a written document

2. A negotiable Instrument payable to bearer is transferable merely by delivery whereas a Negotiable Instrument payable to order is transferable by endorsement and delivery.

3. The holder of a Negotiable Instrument can sue upon it in his own name.

4. Its works in the same manner as money and like money it may also be transferred from one person to another.

5. The Transferor does not need to give notice to any person at the time of transferring the Instrument.

6. It is the simplest and most convenient mode of assignment of a debt.

7. The tittle to the Instrument received by a bonafide transferee is not affected by defect in the title of the transferor.

A. Negotiable Instruments

1. Promissory note

2. Bill of exchange

3. Cheque

4. Exchequer bill

5. Circular note

6. Dividend warrant

7. Share warrant

8. Bearer debenture

9. Bank note

10. Bank draft

B. Non Negotiable Instruments

1. Money order

2. Postal order

3. Deposit receipt

4. Share certificate

C. Quasi Negotiable Instruments

1. Bill of lading

2. Dock warrant

3. Carriers receipt

4. Letters of credit

5. Railway receipt

Types of Negotiable Instruments

According to the negotiable Instruments act 1881 there are just three types of Negotiable Instruments example promissory note, bill of exchange and cheque. However many other documents have also been recognized as negotiable instruments on the basis of custom and usage like treasury bills, share warrant etc. They posses the features of Negotiability

Promissory note

            A promissory note is an Instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money to or to the other of a certain person.  This type of a document is called a promissory note.

Features of promissory note

1. A promissory note is unconditional

2. It is always in writing a verbal promise to pay a specified sum of money is not a promissory note.

3. It is made and signed by the debtor.

4. A promissory note is made as payable in the Currency of the  country

5. A promissory note drawn for a specified duration should be adequately stamped According to its value.

6. A promissory note should be drawn for the payment of a specified sum.

Bill of exchange

            A bill of exchange is an Instrument in writing, unconditional order signed by the maker directing a certain person to pay a certain sum of money only to or to the other of a certain person or to the bearer of the Instrument.

Features of bill of exchange

1. A bill must be in writing, duly signed by its drawer accepted by its drawee and properly stamped as per Indian stamp act.

2. It must contain an order to pay words like please pay rs.5000 on demand and oblige are not used.

3. The order must be unconditional.

4. The order must be to pay money and money alone.

5. The sum payable mentioned must be certain or capable of being made certain.

6. The parties to bill must be certain.

Cheque

            A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. It is an unconditional order in writing be drawn by a customer on his bank. Requesting the specifying bank to pay on demand a certain sum of money to a person named in the cheque or to the bearer or to the order of a stated person.

A cheque being a bill of exchange must possess the following requirements.

1. A cheque must be drawn upon a specified banker

2. A cheque must be payable on demand.

3. A cheque must be signed by the drawer.

4. A cheque must be an unconditional order to pay a certain amount of money.

5. A cheque be dated.

Types of cheque

1. Open cheque:- A cheque is called open when it is possible to get cash over the counter at the bank.

2. Crossed cheque:- Since open cheque is subject to risk of theft it is dangerous to issue such cheques. This risk can be avoided by issuing other types of cheque called crossed cheque.

3. Bearer cheque:- A cheque which is Payable to any person who presents it for payment at the bank counter is called bearer cheque.

4. Order cheque:- An order cheque is one which is payable to a particular person. In such a cheque the word bearer may be cut out or cancelled and the word order may be written. The payee can transfer an order cheque to someone else by singing his or her name on the back of it..

Quasi Negotiable Instruments

        Quasi Negotiable Instruments are those Instruments which can be transferred by endorsement and delivery but the transferee does not get a better tittle that of the transferor. Therefore they cannot be classified as negotiable Instruments and hence the negotiable Instruments act is not applicable to them.