Negotiable Instruments Act ,1881was enacted in 1881 and it’s extent and application is to the whole of Pakistan.It came into force on the first day of March 1882.
Negotiable means transferable and Instrument means a written document which creates a right in favor of any person.
According to Section 13 of the Negotiable Instruments Act,1881:
A negotiable Instrument means a Promissory Note ,Bill of Exchange and Cheque payable either to bearer as well.
Essentials of Negotiable Instruments:
Written:
A negotiable Instrument is a written document and it can never be oral.
Freely Transferable:
A negotiable Instrument can easily be transferred from one person to another person.
Signature:
A negotiable Instrument is complete and effective only when it is duly signed.
Right of holder:
Negotiable Instrument gives the right to the holder and a person who takes such negotiable Instrument bonafide and for value known as Holder.
Promise or Order :
Negotiable Instrument contains an unconditional promise or Order to pay.
Certain Amount:
In negotiable Instrument,the promise or Order is made for payment of certain amount.The status of Negotiable Instrument is equivalent to cash as it is promise or alternative to cash .
Presumptions:
The consideration is not mentioned on the Negotiable Instrument.It has been presumed that the Negotiable instrument is drawn for valuable consideration.The presumptions are regarding consideration,time,date stamp and holder in due course .
Documents Included in Negotiable Instruments:
Promissory Note
Bill of Exchange
Cheque