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Unit 4: Law of Negotiable Instruments
Self Assessment Notes
Fill in the blanks:
9. Section ………….provides that a bill or cheque payable to bearer is negotiated by mere
delivery of the instrument.
10. Where along with endorser’s signature, the name of the endorsee is specified, the
endorsement is called ………………………
4.6 Presentment
Presentment of a negotiable instrument is made for two purposes: (i) for acceptance and (ii) for
payment. Before discussing the presentment for payment, it is necessary to refer to the maturity
of the instrument.
4.6.1 Maturity (Ss.21-25)
Cheques are always payable on demand but other instruments like bills, notes, etc., may be
made payable on a specified date or after the specified period of time. The date on which
payment of an instrument falls due is called maturity (s.22). Therefore most of the provisions
relating to presentment for payment are linked with the maturity of the instrument. Section 21
provides that a note or bill ‘at sight’ or ‘on presentment’ is payable on demand. It is due for
payment as soon as it is issued. Therefore the question of maturity arises only in the case of a
note or bill payable ‘After sight’ or ‘After date’ or at a certain period after the happening of an
event which is certain to happen.
Section 22 provides that the maturity of a note or bill is the date on which it falls due. Further, it
adds that in calculating the maturity of a note or bill which is not payable on demand, at sight or
on presentment, three days - called the days of grace - must be added to the date on which the
instrument is expressed to be payable. Thus a note or bill payable after a specified period after
date or after sight matures or falls due on the last day of the grace period and must be presented
for payment on that day and if dishonoured, suit can be filed on the next day after maturity.
4.6.2 Presentment for Payment
A negotiable instrument must be presented for payment to the maker, acceptor or drawee
thereof, as the case may be, by the holder or his agent. In case of default, the parties to the
instrument other than the maker, acceptor or drawee are not liable to such holder (s.64). The
presentment for payment must be made during the usual hours of business, and at a banker’s
premises, during banking hours (s.65).
Self Assessment
Fill in the blanks:
11. The date on which payment of an instrument falls due is called……………….
12. Presentment of a negotiable instrument is made for two purposes which are for acceptance
and for ………………….
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