However, Currency notes are money and they don’t fulfill the conditions of the Promissory note. I promise to pay the bearer a sum of _Rupee/ Rupees.
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Is Currency Note a promissory note?Īlthough currency Notes bear the following: The maker is who promises to pay and the payee is who is promised to pay. Demand Promissory Note has to be paid immediately on demand and Usance Promissory Note has to be paid after certain time period. Demand Promissory Note or Usance Promissory Note. There are two types of the promissory notes viz. The money has to be paid to the certain person.Īs per section 4 of the Negotiable Instruments Act, 1881, an instrument in writing containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of instrument is called Promissory note.PN has an unconditional undertaking called promise.When a person issues a promissory note, he/ she would have to stamp it as per the Indian Stamp Act and normally a revenue stamp is affixed on the PN signed by the promissory. But it does not mean that we write “I owe You” and it becomes a PN. PN means a paper with a writing which has a promise. Forgery / theft / deceit do not convey any title.If the instrument bears A/C payee crossing and restricted endorsement then NO person can be a holder in due course.If the instrument bears not-negotiable crossing, then the NO person can be a holder in due course.Holder in Due course must obtain the instrument in Good Faith.This is the basic difference between the Holder and Holder in Due course. Holder in due course means a person who must have the possession of the instrument. A holder can cross a cheque if it is not already crossed.The holder has the right to obtain a duplicate of instrument is lost.If it is stolen, then also payee or last endorsee is holder because a thief cannot become holder.If it is damaged the payee or last endorsee is the holder.If it is a bearer cheque, the person in whose name it is made is a holder.If there is a forged endorsement then, last endorsee is the holder.If the payee or endorsee dies, then the legal heir is the holder.
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Negotiability means transfer of an instrument from a person / entity to another person / entity. Difference between a Crossed cheque and A/C Payee cheque.Antedated Cheque and a post dated cheque.What is an Inland Bill of exchange? How it is different from Foreign Bill of Exchange?.
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