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Topic to be tested:
Negotiable Instruments
Learning objective:
· To comprehend the objectives of Negotiable Instruments Act and appreciate the
characteristics of Negotiable Instruments.
Negotiable Instruments such as Promissory Notes, Bill of Exchange and Cheques have gained
utmost importance in business now days. You are required to thoroughly study the basics of
negotiable instruments and complete the below mentioned requirements.
Requirement 1:
Describe the objectives/purposes of Negotiable Instruments Act 1881. 5 Marks
Requirement 2:
Discuss the following essential characteristics of Negotiable Instruments. You are required to
provide suitable example of each essential for better understanding: 15 Marks
1) Payable to order or bearer
2) Easy transferability
3) Transferee can sue in his own name
4) Title of holder in due course
5) Presumptions
(Note: 1 mark for example in each case for Sr.1 to 4 and 0.5 marks for one presumption in Sr.5)
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Replies to This Discussion

lets start on disscussion

Negotiable instruments, a written document which is freely transferable and which creates a rights in favor of some person to receive money.   

like promissory note, Bill of Exchange and cheque are negotiable instruments. 

example kis trha ki dyni han ?its confusing

make a sentence, it will be a example for all these 5 requirements.

for example 1

chequ can be payable to order or bearer.

order means that only person can receive amount which name is mention in cheque

bearer means that any one can receive the amount.

is it right?????

these examples are right or not?

1)      Easy transferability

Cash can be transfer easily anywhere we want to transfer through bank, online transaction, easy paisa or any other services like that.

2)      Transferee can sue in his own name


Mr Ali transfer 10,000 amount to Mr Akbar account but due some issues he can’t get amount in his account then Mr Akbar which is transferee can Sui its name in bank that he could not get his amount.

) Presumptions

  1. An idea that is taken to be true on the basis of probability.

"Underlying presumptions about human nature"


Behavior perceived as arrogant, disrespectful, and transgressing the limits of what is permitted or appropriate.

whts for fourth???

Requirement 1: Describe the objectives/purposes of Negotiable Instruments Act 1881.
After reading Negotiable Instrument Act 1881 we will be able to learn …..
1: Easy transferability in it.
2: How to market, cross and cancel the cheques.
3Two parties in a relationship with business affairs and in relation of the transaction of money or to facilitate the parties..
4: Material alternations are not defined in it.
5: limitation for payment of loans.
Discuss the following essential characteristics of Negotiable Instruments.. You are required to provide suitable example of each essential for better understanding: 15
There are three types of negotiable instruments.
1: promissory note:
It is a type of promise that person do to pay a certain sum of money to a certain person or to bearer or to order certain person.
2: billing exchange:
It is an instrument in written contains an unconditional order signed by maker or directs a certain person to pay on demand.
3: cheque:
It is a bill of exchange drawn by a specified banker .it is a way of draw money from bank.

1) Payable to order or bearer
2) Easy transferability
3) Transferee can sue in his own name
4) Title of holder in due course
5) Presumptions
1) Payable to order or bearer:
Any negotiable instrument that is simply paid to the bearer without requiring proof of identity. And Pay-to-bearer instruments are not registered in the name of a specific owner and will pay to whoever bears them.
for example:
A person who sign the cheque and to the any person who can draw it easily because the name and identity of bearer is not mention on it.so the person who draw the cheque is called bearer in this example.
2) Easy transferability
A negotiable instrument is freely transferable. Usually, when we transfer any property to somebody, we are required to make a transfer deed, get it registered, pay stamp duty, but in case of negotiable instruments these formalities are not required. Ownership is change when payable to bearer in transferability
3)Transferee can sue in his own name:
Transferee can sue in his own name without giving any notice to the debetor.any type of bill, cheque or note represents debt. The person who transfer is called transferor and to whom he transfer is called transfree.if a transferor transfer a cheque to the transferee and it had bounced already the transferee can complain against transferee.
4) Title of holder in due course:
Title of holder in due course means any person who for the consideration becomes the possessor of the promissory note, bill exchange or a cheque at two conditions
If payable to bearer
if payable to order before it become overdue.
5: Presumptions:
That’s means
Holder have money, easy transferability, contact is valid,promisory note ,all the process are complete etc

why we need these negotiable instruments:

all these instruments are in favor of transaction, as business grows we need very urgent and some reliable source to save our money during transaction, these instruments helps us to to making the business deals without having a large amount of cash in pocket.

initially there was a barter system for changing of goods with goods, which was very old and slow, then money came into the market for the transaction and now a days these instruments are also the alternate of cash in hand.

we can have make a large deal without having a large cash amount in our pockets.

look handouts lecture no 32,33,34

Negotiable Instruments..


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