bill of exchange, dishonour of bill and noting&protesting

New York OfficeHobes Boulevard, 689 / 1101

New York - U.S

Boston office3rd Avenue west side , 1000 / 102

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

wecare@silverstr.com

NEGOTIABLE INSTRUMENT

It is an instrument in writing, that contains the signature of the

maker or drawer; an unconditional promise or order to pay a

certain sum in cash that is payable either upon demand or at a

specifically designated time to the order of a designated person

or to its bearer.

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Boston - U.S

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PRESENTMENT OF NEGOTIABLE INSTRUMENT

• The process of presenting or placing the instrument before

the maker, acceptor or drawee is known as a ‘presentment of

Negotiable Instrument’.

New York - U.S

Boston - U.S

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ACCEPTANCE

Acceptance means acknowledgement of the sum mentioned in

a bill by the drawee or any other person on his behalf.

New York - U.S

Boston - U.S

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ESSENTIALS OF A VALID ACCEPTNACE

Following are the essentials of a valid acceptance:

• It must be in writing.

• It must be signed by the drawee or his agent.

• It must appear on the bill.

• The acceptance bill must be delivered to the holder.

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Boston - U.S

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PRESENTMENT FOR ACCEPTANCE

• Applicable only for bill of exchange but in case of

payable on demand or payable on fixed time need not

be presented for acceptance.

Acceptance of BOE is necessary in following cases:

• When BOE is payable after sight.

• Where there is an express stipulation.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

When it is not necessary for bill to present for acceptance still

holder may choose to present it for acceptance

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

TO WHOM PRESENTMENT CAN BE MADE

• The drawee of the bill.

• All the drawees.

• Official receiver of an insolvent drawee.

• The authorized agent.

• The acceptor of honor.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

TIME AND PLACE OF PRESENTMENT

• Business day within business hours.

• Within reasonable time if no time is specified.

• Within that period specified in the bill.

• At a place that is specified in the bill.

• If no place is mentioned in the bill, it may be presented at

usual place of business of drawee or his residence.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

HOURS FOR PRESENTMENT

• Presentment must be made during the usual business hours

of business.

• PRESENTMENT OF CHEQUE: It must be presented within

banking hours.

New York - U.S

Boston - U.S

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PRESENTMENT FOR SIGHT

• The expression after sight in the note means that payment is

not to be demanded till it has been shown to the maker.

New York - U.S

Boston - U.S

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PRESENTMENT FOR PAYMENT

• Must be presented for payment before drawee, maker,

acceptor thereof by the holder or on the behalf of holder

therein provided.

• In default of such presentment, the other parties thereto are

not liable thereon to such holder.

• Presentment after date of sight: must be on date of maturity

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Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

• ON DEMAND INSTRUMENT: Must be presented in a

reasonable time after it is received by holder.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

DISHONOUR OF BILL

DISHONOUR BY NON ACCEPTANCE

• Failure of a drawee to accept a duly presented and valid bill

of exchange.

• When drawee or one of several drawees make default to

accept the bill of exchange.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

For example

Mr.A gave a cheque to Mr.B and the date written on it was 16th

Nov. MR.B took this cheque to bank on 16th NOV but bank

didn't accept this cheque although it was presented to bank but

still it was refuse by bank to accept it, so this cheque is said to

be dishonour by non acceptance.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

• When the drawee is incompetent to contract then bill may be

treated as dishonoured.

For example

• If a person is insolvent

• Age

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Boston - U.S

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DISHONOR BY NON PAYMENT

• Failure of a drawee to pay a valid bill of exchange on its due

• This failure gives the drawer the legal right to start a court

action called protest..

• When maker of the note ,acceptor of the bill ,or drawee of

cheque makes default in payment..

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

FOR EXAMPLE

Mr.A purchased fans from Mr.B and sign a note that Mr. A will

give Mr.B remaining money after 3 months but after 3 months

he refuse to give Mr.B the remaining money this mean

dishonour by non payment.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

NOTING

SECTION 99

Promissory note or bill of exchange has been dishonoured

(non-acceptance or non payment)

The holder should get the instrument ‘noted’ by a notary

public.

Must specify the date of dishonour,

The reason (why the holder treats it as dishonoured)

The notary’s charges.

“Noting” must be made within a reasonable time after

dishonour.

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Boston - U.S

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PROTEST

SECTION 100

When a promissory note or a bill or exchange has been

dishonoured by non acceptance or non payment, the holder

may, within a reasonable time, cause such dishonour to be

noted and certified by a notary public. Such certificate is called

a protest.

New York - U.S

Boston - U.S

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CONTENTS OF PROTEST

SECTION 101

1)The instrument and of everything written or printed thereupon

2)The name of the person for whom and against the instrument

has been protested

3)A statement that payment or acceptance, or better security, as

the case may be, has been demanded of such person by the

notary public;

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4) When the note or bill has been dishonored, the place and

time of dishonor, and, when better security has been refused,

the place and time of refusal;

5) The subscription of the notary public making the protest;

6) In the event of an acceptance for honor or of a payment for

honor, the name of the person by whom, of the person whom,

and the manner in which, such acceptance or payment was

offered and effected.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

PROTEST

Section 100 deals with “protest”. it says, “when a promissory note or bill

exchange has been dishonored by non-acceptance or non-payment.the

holder may , within a reasonable time, cause such dishonor to be noted and

certified by a notary public, such a certificate is called protest.

A formal declaration whereby a person expresses a personal objection or

disapproval of an act. A written statement, made by a notary, at the request

of a holder of a bill or a note that describes the bill or note and declares that

on a certain day the instrument was presented for, and refused, payment.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

PROTEST FOR BETTER SECURITY

When the acceptor of a bill of exchange has become insolvent ,

or his credit has been publically impeached, before the maturity

of the bill. The holder may ,within a reasonable time, cause a

notary public to demand better security for the acceptor and on

its being refused may, with in a reasonable time, cause such

facts to be noted and certified as aforesaid. such certificates are

called a protest for better security.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

SECTION 159

Protest is dispensed with by any circumstances which would

dispense with notice of dishonor. Delay in noting or protesting is

excused when delay is caused by circumstances beyond the

control of the holder and not imputable to his default,

misconduct or negligence. When the cause of delay ceases to

operate, the bill must be noted or protested with reasonable

diligence.

New York - U.S

Boston - U.S

Toll Free : 08004004440Phone : 55 41 1432.5656

bill of exchange, dishonour of bill and noting&protesting

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