The negotiable instrument act was introduced in the year 1881.The act which helped to promote the growth of banking and financial transactions. Predominantly this act was introduced in the period of British rule, most of the provisions in this act still remain unchanged. The legal definition of negotiable is that something can be transferable from one party to another party by delivery so that the title shall pass with or without the endorsement to the transferee.

Negotiable instrument act

Negotiable instrument is signed the written document. This document helps to transfer the particular amount of money to the assigned person. The document carries the promise to pay the particular amount of money to the assigned person on a future date for on demand as the case may be. There is no need for concrete conditions to consider a document as a negotiable instrument , if we want to consider a document as a negotiable instrument the document must be signed with a signature , by the maker of the instrument that is one who issues the draft. If a person promises to give an amount of money is known as drawee of funds and the person receiving it is known as the drawer of funds.


  • It is very convenient for the ordinary people.By using the instruments there is no hectic or lengthy process needed for transferring the ownership of the instrument.
  • The transactions of negotiable instruments should be in the written form and also the documentations process must be handwritten notes, printed or typed.
  • There should be a definite time for the order of payment.If there is no date mentioned the payment must be done within a reasonable time.


The negotiable transactions classified into three types .

  1. Promissory note 

If there is a transaction takes place between a debtor and creditor.The debtor creates the instrument promising the amount the money on a specified date.

  1.   Bills of exchange

In the case of  bill of exchange creditor gives the order to pay the amount of money from the debtor .It is absolutely opposite of the promissory notes . Creditor have the duty to prepare the bill.

  1. Cheque 

In the case of cheque bank is in the position of drawee.The bank is instructed to pay a certain amount of money to the assigned payee.


  • Every negotiable instruments would be in writing and also parties would have relevant documents.This condition may change depending upon the type of negotiable instruments such as promissory note ,Bills of exchanges, cheques etc There is no scope of any verbal dealing between the parties and court would not be considered in case of any dispute.
  • The sign of the parties is mandatory Because without the sign there is no validity for the document.Both parties have the obligation to sign the document.
  • These instruments are clearly recognized by the government as well as the laws of the country.
  • Now a days very comfortable mode of transactions are accepted among the people.The safe system and credibility of the banks would ensure that the money gets transferred easily and to the right people.


This act is very helpful to the ordinary people for the convienent and safe transactions .If there is any fraud happened in the dealings related with negotiable instrument court will take appropriate step and will ensure the justice to the aggrieved party.

Aishwarya Says:

I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.


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