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Unit 10: Negotiable Instruments
2. If such an application is not made at the earlier stage and made only at a later Notes
subsequent stage of the case, compounding can be allowed with a cost of additional
10% of the cheque amount to be deposited with such authority which the Court
deems fit.
3. The percentage of cost varies in appeal stage viz., 15% in Sessions or High Court and
20% in Supreme Court.
The decision further clarified that the Court can in its discretion reduce the costs. The
grading scheme as to costs is intended to encourage compounding at an early stage of
litigation. The time of Court also can be saved. In this case the Court also made a direction
to disclose by affidavit along with the complaint to state that there is no other claim in any
other court as to the same cause of action.
Source: http://www.scribd.com/doc/86299846/Case-Study-on-Negotiable-Instruments
If your home is used for security and you fail to pay the promissory note, you could lose your
home. Most promissory notes attached to property are secured by a trust deed (deed of trust), a
mortgage or a land contract, and those instruments are recorded in the public records. Promissory
notes are often unrecorded.
10.3.1 Definition of Promissory Note
“A written, signed, unconditional promise to pay a certain amount of money on demand at a
specified time. A written promise to pay money that is often used as a means to borrow funds or
take out a loan.”
The individual who promises to pay is the maker, and the person to whom payment is promised
is called the payee or holder. If signed by the maker, a promissory note is a negotiable instrument.
It contains an unconditional promise to pay a certain sum to the order of a specifically named
person or to bearer—that is, to any individual presenting the note. A promissory note can be
either payable on demand or at a specific time.
10.3.2 Parties to a Promissory Note
A promissory note has the following parties:
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,
The holder: is either the payee or some other person to whom he may have endorsed the
note,
The endorser,
The endorsee.
10.3.3 Essentials of a Promissory Note
To be a promissory note an instrument must possess the following essentials:
It must be in writing. An oral promise to pay will not do.
It must contain an express promise or clear undertaking to pay. A mere acknowledgement
of debt is not sufficient.
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