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Act 1881
In some places of negotiable instruments act also
named as:


Social Security Act 1881
History

1.   Common prototypes of bills of exchanges and promissory notes
     originated in China in the 8th century

2.   Later such document for money transfer used by Arab merchants
     by Italian merchants in the 12th century


Social Security Act 1881
Definition:                    A transferable, signed document
                               that promises to pay the bearer a
                               sum of money at a future
                               date or on demand.

          Examples:

        Cheques, bills of exchange, promissory
        note, Banker’s drafts, Railway receipts,
        Bearer debentures.

http://www.investorwords.com/3226/negotiable_instrument.html#ixzz1WecfMsBS
Characteristics
      Following are the some characteristics of negotiable
      instruments



  •   Easy to write
  •   Property
  •   Title
  •   Rights
  •   Presumptions
  •   Prompt Payment
Kinds of Negotiable Instruments


     1. Promissory Notes

     2. Bills of Exchange

     3. Cheques
Promissory Note

1.   “A document signed by a borrower promising to repay a loan under agreed-
     upon terms”.

2.   “A short-term debt security, usually with a maturity of five years or less”.



         Also called Prom note. Simply it is a promise to pay




     http://www.investorwords.com/3351/note.html#ixzz1Wjz8eBmj
Negotiable instruments
Parties involved in Promissory Note

• The maker: The person who makes or executes the note promising to
               pay the amount stated therein

• The payee: One to whom the note is payable


Conditional

• The holder: A person other than payee to whom he may have endorsed
               the note
Illustrations


(a) A promise to pay B or order Rs. 500

(b) A promise to pay B, Rs. 500 and all other sums which shall be due to him

(c) A promise to pay B, Rs. 500 and to deliver to him my black horse on 1st January
Bills of Exchange


             The definition of bills of exchange is much
             similar to promissory note.



                         A "bill of exchange" is an instrument in writing
                         containing an unconditional order, signed by the
Definition               maker, directing a certain person to pay a certain
                         sum of money only to or to the order of, a certain
                         person or to the bearer of the instrument
Parties involved in Bills of Exchange

• The Drawer:   The person who draws the bill.

• The Drawee:   The person on whom the bill is drawn.

• The holder:   Is either the original payee or any other
                 person to whom, the payee has endorsed
Essentials of Bills of Exchange

•   It must be in writing.

•   It must contain an unconditional order to pay money only and not merely a
    request

•   It must be signed by the drawer.

•   The parties must be certain.

•   The sum payable must also be certain.

•   It must comply with other formalities e.g. stamps, date etc.
Section 6
                         A cheque is a bill of exchange drawn on a
Cheque                   specified banker, and not expressed to be
                         payable otherwise than on demand.




 Simple Definition

 A cheque is a bill of exchange drawn on a bank payable always on
 demand. Thus, a cheque is a bill of exchange with two additional
 qualifications, namely:

 (i) It is always drawn on a banker, and
 (ii) It is always payable on demand.
Specimen of Cheque
                                       ABC Bank
                                                                        Date_____________
Pay 'A;--------------------------------------------------------------------------------or the bearer
sum of rupees---------------------------------------------------------------------------------only.
                                                                                      Rs-------/-

A/c No---------LF------
                                                                                  Sd/-
No---------------------
Parties of cheque

• The Drawer:     The person who draws the cheque.

• The Drawee:     The person on whom the cheque is drawn.


Conditional

• Third person:     Is either the original payee or any other person to whom,
   (Drawee)         the payee has endorsed
Essentials of Cheque

•   It is always drawn on a banker

•   It is always payable on demand

•   It does not require acceptance

•   No Stamp is required to be affixed on cheques

•   A cheque is usually valid for fix months

•   The banker is liable only to the drawer
Types of Cheque

 1. Order Cheque
    Order Cheque is a cheque , which is expressed to be so
    payable or which is expressed to be payable to a
    particular person without containing words
    prohibiting transfer or indicating that it will not be
    transferable.

 2. Open Cheque
    They are payable in cash at the counter of the banks to
    the bearer of the cheque.
Cont….
3. Crossed Cheque
   These type of cheques are not encashed at the counter
   but which can be collected only by a bank from
   the drawer bank. But these days an individual can
   also draw a crossed cheque for the purpose of safety
   and security in certain cases.

4. Bearer Cheque
   A bearer cheque is that which can be cashed for the bank
   by the bearer of the cheque. Any person who is in
   possession of a bearer cheque can cash it without any
   difficulty.
Difference among 3

Promissory Note            Bill of Exchange             Cheque

1. There are two parties   1. There are three parties   1. There are normally
in promissory note.           BOE .                     two parties in cheque
2. Party names are         2. Party names are           2. Party names are
maker and payee in P          drawer, drawee &          drawer & drawee
note.                         holder
3. Maker and payee         3. drawer and drawee         3. Drawer and drawee
cant be same.                 may b same                   not same
4. Unconditional           4. Unconditional order       4. On order for
    promise to payee           to drawee                   payment
5. Presented for           5. Must be accepted by
payment without any           drawee                    5. On demand
prior acceptance
Partnership Act 1932
Meaning:    When more than one persons join to start or run a business.




   Definition

   Sec. 4: “The relation between persons who have agreed to share the
   profit of business carried on by all or any one of them acting for all”.

   G. Baker: “A voluntary association of two or more industries for the
   operation of an industrial, commercial or other business undertaking”



   Partnership is the Agreement between partners
Classification of Partners

       Dormant
       Active
       Nominal
       Minor
       Quasi
       Partner without capital
       Limited
       etc,
Partnership Deed


   It is document which contains all the rules and
   regulations required for the partnership business.
Sole proprietorship
         Meaning:
         The enterprise carried on under the ownership of one person.



 Definitions:

 D.W. Stafford:

 “It is simplest form of business which is owned and controlled by
 one person”

 G. Baker:

 “A business operated by one person to earn profit”
Characteristics

  Ownership of business
  Finance
  Risk
  Secrecy
  Profit
  No agreement
  Easily transferable
  Freedom of Action
  Risk
  Unlimited liability, etc
Difference B/W sole proprietorship and
partnership
Sole Proorietorship                    Partnership
1. By a single person      Ownership   1. More than two persons
2. Single authority to     Decisions
                                       2. All partner have a right
   make the decisions                     to make decisions
3. Difficulty raising      Capital     3. more funds
   capital
4. All liabilities faced   Liability   4. Liabilities are faced by
   by one person                          all partners
5. Easy to start           Formation   5. Documentation
6. Bear by one person Risk           6. By all partners
7. Size of business   Size of business Size of usually large
                                     7.
   usually small
Negotiable instruments

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Negotiable instruments

  • 1. Act 1881 In some places of negotiable instruments act also named as: Social Security Act 1881
  • 2. History 1. Common prototypes of bills of exchanges and promissory notes originated in China in the 8th century 2. Later such document for money transfer used by Arab merchants by Italian merchants in the 12th century Social Security Act 1881
  • 3. Definition: A transferable, signed document that promises to pay the bearer a sum of money at a future date or on demand. Examples: Cheques, bills of exchange, promissory note, Banker’s drafts, Railway receipts, Bearer debentures. http://www.investorwords.com/3226/negotiable_instrument.html#ixzz1WecfMsBS
  • 4. Characteristics Following are the some characteristics of negotiable instruments • Easy to write • Property • Title • Rights • Presumptions • Prompt Payment
  • 5. Kinds of Negotiable Instruments 1. Promissory Notes 2. Bills of Exchange 3. Cheques
  • 6. Promissory Note 1. “A document signed by a borrower promising to repay a loan under agreed- upon terms”. 2. “A short-term debt security, usually with a maturity of five years or less”. Also called Prom note. Simply it is a promise to pay http://www.investorwords.com/3351/note.html#ixzz1Wjz8eBmj
  • 8. Parties involved in Promissory Note • The maker: The person who makes or executes the note promising to pay the amount stated therein • The payee: One to whom the note is payable Conditional • The holder: A person other than payee to whom he may have endorsed the note
  • 9. Illustrations (a) A promise to pay B or order Rs. 500 (b) A promise to pay B, Rs. 500 and all other sums which shall be due to him (c) A promise to pay B, Rs. 500 and to deliver to him my black horse on 1st January
  • 10. Bills of Exchange The definition of bills of exchange is much similar to promissory note. A "bill of exchange" is an instrument in writing containing an unconditional order, signed by the Definition maker, directing a certain person to pay a certain sum of money only to or to the order of, a certain person or to the bearer of the instrument
  • 11. Parties involved in Bills of Exchange • The Drawer: The person who draws the bill. • The Drawee: The person on whom the bill is drawn. • The holder: Is either the original payee or any other person to whom, the payee has endorsed
  • 12. Essentials of Bills of Exchange • It must be in writing. • It must contain an unconditional order to pay money only and not merely a request • It must be signed by the drawer. • The parties must be certain. • The sum payable must also be certain. • It must comply with other formalities e.g. stamps, date etc.
  • 13. Section 6 A cheque is a bill of exchange drawn on a Cheque specified banker, and not expressed to be payable otherwise than on demand. Simple Definition A cheque is a bill of exchange drawn on a bank payable always on demand. Thus, a cheque is a bill of exchange with two additional qualifications, namely: (i) It is always drawn on a banker, and (ii) It is always payable on demand.
  • 14. Specimen of Cheque ABC Bank Date_____________ Pay 'A;--------------------------------------------------------------------------------or the bearer sum of rupees---------------------------------------------------------------------------------only. Rs-------/- A/c No---------LF------ Sd/- No---------------------
  • 15. Parties of cheque • The Drawer: The person who draws the cheque. • The Drawee: The person on whom the cheque is drawn. Conditional • Third person: Is either the original payee or any other person to whom, (Drawee) the payee has endorsed
  • 16. Essentials of Cheque • It is always drawn on a banker • It is always payable on demand • It does not require acceptance • No Stamp is required to be affixed on cheques • A cheque is usually valid for fix months • The banker is liable only to the drawer
  • 17. Types of Cheque 1. Order Cheque Order Cheque is a cheque , which is expressed to be so payable or which is expressed to be payable to a particular person without containing words prohibiting transfer or indicating that it will not be transferable. 2. Open Cheque They are payable in cash at the counter of the banks to the bearer of the cheque.
  • 18. Cont…. 3. Crossed Cheque These type of cheques are not encashed at the counter but which can be collected only by a bank from the drawer bank. But these days an individual can also draw a crossed cheque for the purpose of safety and security in certain cases. 4. Bearer Cheque A bearer cheque is that which can be cashed for the bank by the bearer of the cheque. Any person who is in possession of a bearer cheque can cash it without any difficulty.
  • 19. Difference among 3 Promissory Note Bill of Exchange Cheque 1. There are two parties 1. There are three parties 1. There are normally in promissory note. BOE . two parties in cheque 2. Party names are 2. Party names are 2. Party names are maker and payee in P drawer, drawee & drawer & drawee note. holder 3. Maker and payee 3. drawer and drawee 3. Drawer and drawee cant be same. may b same not same 4. Unconditional 4. Unconditional order 4. On order for promise to payee to drawee payment 5. Presented for 5. Must be accepted by payment without any drawee 5. On demand prior acceptance
  • 20. Partnership Act 1932 Meaning: When more than one persons join to start or run a business. Definition Sec. 4: “The relation between persons who have agreed to share the profit of business carried on by all or any one of them acting for all”. G. Baker: “A voluntary association of two or more industries for the operation of an industrial, commercial or other business undertaking” Partnership is the Agreement between partners
  • 21. Classification of Partners  Dormant  Active  Nominal  Minor  Quasi  Partner without capital  Limited etc,
  • 22. Partnership Deed It is document which contains all the rules and regulations required for the partnership business.
  • 23. Sole proprietorship Meaning: The enterprise carried on under the ownership of one person. Definitions: D.W. Stafford: “It is simplest form of business which is owned and controlled by one person” G. Baker: “A business operated by one person to earn profit”
  • 24. Characteristics  Ownership of business  Finance  Risk  Secrecy  Profit  No agreement  Easily transferable  Freedom of Action  Risk  Unlimited liability, etc
  • 25. Difference B/W sole proprietorship and partnership Sole Proorietorship Partnership 1. By a single person Ownership 1. More than two persons 2. Single authority to Decisions 2. All partner have a right make the decisions to make decisions 3. Difficulty raising Capital 3. more funds capital 4. All liabilities faced Liability 4. Liabilities are faced by by one person all partners 5. Easy to start Formation 5. Documentation 6. Bear by one person Risk 6. By all partners 7. Size of business Size of business Size of usually large 7. usually small