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Legal Aspects of BusinessUnit 1: Commercial Law
Prepared and presented by,
N. Ganesha PandianAssistant ProfessorMadurai School of
management Madurai
Contents COMMERCIAL LAW
THE INDIAN CONTRACT ACT 1872 Definition of contract, essentials elements and types of a contract, Formation of
a contract, performance of contracts, breach of contract and its remedies, Quasi contracts Contract Of Agency: Nature of agency, Creation and types of agents, Authority
and liability of Agent and principal: Rights and duties of principal and agents, termination of agency.
THE SALE OF GOODS ACT 1930 Nature of Sales contract, Documents of title, risk of loss, Guarantees and
Warranties, performance of sales contracts, conditional sales and rights of an unpaid seller
Negotiable Instruments Act 1881: Nature and requisites of negotiable instruments. Types of negotiable instruments, liability of parties, holder in due course, special rules for Cheque and drafts, discharge of negotiable instruments
Introduction to Business Law
Business law refers to those rules and regulations which govern the formation and execution of business transactions made by various persons in the society.
“ A law is a rule of conduct imposed and enforced by the sovereign”
“Ingnorantia juris non excusat” (Ignorance of law is no excuse)
Law of contract In India Law of contract contained in the Indian
Contract Act 1872, hereinafter referred to this act. It extends to whole of India except the state of J&K and came into force on 1st September 1872.
Meaning: The word ‘contract, derived from Latin ‘contractum’
meaning “ An agreement enforceable by law”.
Indian Contract Act 1872 2 elements a, an agreement b, its enforceability
(legal obligation) Agreement : According to act “ Every promise and
every set of promises forming the consideration for each other is an agreement”.
Promise : According to act “A Proposal when accepted becomes a promise”
Contract = An agreement + Its enforceability
Agreement =Offer + Acceptance
Key definitions in the Indian Contract Act
Contract - section 2(h) defines a contract as “An agreement enforceable by law”
Proposal – section 2(a) defines a proposal as “when one person signifies to another his willingness to do or o abstain from doing anything with a view to obtaining the assent of the other person to such act or abstinence, he is said to make a proposal”
Proposal + Acceptance = Promise
Void contract : A contract cannot be enforced in a court of law is known as void contract, a void contract can’t be changed into a Valid contract.
Voidable contract: A contract which is enforceable at the option of the aggregated party is a voidable contract. It can be changed at the desire of aggravated party .
Elements of Valid contract 1. Offer and acceptance 2. Legal relationship 3. Lawful consideration4. Capacity of parties5. Free consent 6. Legality of the object7. Legal formalities8. Certainty9. Possibility of performance10. Not expressly declared void
Classification of contracts
Basis of enforceability
Basis of creation
Basis of execution
Valid VoidVoidable
unenforceable
Express
implied
Quasi
Execute
d
Executor
y
Unilateral contract – It is a contract in which only on party has yet to perform his obligation such contract are termed as contracts with executed consideration.
Bilateral contract – Bilateral contracts are two sided contracts in which there are two obligatory to be fulfilled at the time of its formation.
Offer and acceptance Promiser or offerer – person making proposal Promisee or offeree – Person accepting
proposal An offer can be made by i, by words(whether
oral or written) ii, by conduct iii, by omission Types of offer I, Express offer II, Implied offer
III, specific offer IV, General offer
Essential requirements of valid offer1, The offer must be communicated to the other party 2, The offer must be made with a view to obtain3, The terms of the offer must be definite and certain4, The offer must be capable of creating a legal relationship 5, An offer must be express or implied from the circumstances6, An offer must be conditional7, A tender is an offer as it is in response to an invitation to
offer8, A mere statement of intention is not an offer
Revocation of offer Under sect 6 of Indian contract act 1872,
an offer is revoked under the following circumstances:
I, By giving notice to revocationII, by lapse of timeIII, After lapse of reasonable time, by death or
insanity and by refusal
Cross offers : Where two parties makes identical offers to each other in ignorance of each other’s offer, then the offers are known as cross offers and neither of the two can be called an acceptance of the other, and therefore, there is no contract
Counter offers : A counter offer is a rejection of original offer and making a new offer. The new offer is a counter offer and subsequently changes his mind and wishes to accept the original offer, can’t do so as the first offer lapses and he can’t treat it as still open
Tenders A tender ( in response to an invitation
to offer) is an offer and may be either1. Tender as a definite offer2. Tender as standing offer
Acceptance Acceptance is one of the essential elements of a valid
contract .An offer may be accepted only by the person to whom it is made.
Essentials of valid acceptance:1, Acceptance must be absolute and unconditional2, Acceptance must be communicated to offerer3, Acceptance must be made within reasonable time4, Acceptance may be Expressed or implied5,Agreement to accept in future 6, Counter offer is not an acceptance
Communication of Offer, Acceptance and Revocation
According to sect 4, the communication of proposal is complete when it comes to the knowledge of the person to whom it is made
The communication of acceptance and revocation is complete:1. As against the proposer, when it is put into course of
transmission to him so as to be out of the power of acceptor
2. As against the acceptor, when it comes to the knowledge of proposer
Revocation of proposal and acceptance
Sec 5 provides that a proposal may be revoked at any time before the communication of its acceptance is complete, as against the proposer, but not afterwards.
Also an acceptance may be revoked at any time before the communication of acceptance, as against acceptor, but not afterwards
Termination of offer: An offer may come to an end by revocation, or lapse or rejection
Lapse of offer1. The offer lapses after a stipulated or reasonable time2. An offer stands revoked, if the offeree fails to fulfill a
condition precedent to acceptance (sec 6(3))3. Revocation by death or insanity 4. An offer terminates, when it is rejected by offeree5. An offer terminates by not being accepted in the mode
in the prescribed6. An offer terminates, when it is revoked by offerer,
before acceptance
Consideration Consideration means that when a party to an agreement
promises to do something, he must get something in return.Definition: Sect 2(d) of the contract Act 1872, defines: “When at the
desire of the promisor, the promisee or any other person has done or abstained from doing or does or abstains from doing or promises to do or to abstain from doing something, such act or abstinence or promise is called consideration for the promise”
Types of consideration1, Executory or future consideration2, Executed or present consideration3, Past consideration
Essentials of consideration1, Consideration must move at the desire of the promisor 2, Consideration must be real3, Consideration must be lawful 4, Consideration may be an act to do something, or abstinence
or a return promise5, consideration may be past, present or future6, Consideration need not be adequate7, Consideration must not be illegal, immoral or opposed to
public policy8, Consideration may move from the promisee or from any other
person
Privity of contract Privity of contract means a relationship subsisting between
the parties who have entered into contractual obligations. It is the general rule that only the parties to contract may sue and be sued on the obligations arising out of the contract
A party cannot sue for carrying out of promises made by parties to a contract
Exceptions: 1, Charge in favor of person 2, Creation of trust3, Contracts entered into by agent
No consideration No contract
A promise without consideration is a gratuitous undertaking and can’t create a legal obligation under the Indian Law, the presence of consideration is as a rule, essential to the validity of contracts.
Exceptions: 1, Natural Love and Affection sect25(1)2, Voluntary compensation sect25(2)3, Time barred debt sect25(3)4, Agency sect1855, Completed gift
Capacity of parties Sec 10,11&68 of the Indian contract act deal with the matter
of capacity of the contracting parties.Definition: Sec 11 of the Indian contract Act state that “Every
person is competent to contract, who is the age of majority according to the law to which he is subject of sound mind and not disqualified from contracting by any law to which he is subject.
A person is incapable of entering into contracts under the following circumstances.
1, Not attained age of majority 2, Person of Unsound mind 3, Disqualified by law
Disqualified personPersons Disqualified
by Law
Insolvents
Alien Enemy
Convicts
Statutory Corporations
Foreign sovereigns
Free Consent Free consent is the consent which has been obtained by the
free will of the parties out of their own accord. According to sec 14, consent is said to be free consent when it is not caused by
I, Coercion as defined under sec 15 II, Undue influence as defined under sec 16III, Fraud as defined under sec 17IV, Misrepresentation as under sec 18V, Mistake as defined under sec 20,21,221, Mistake of law and 2, Mistake of fact
Legality of object and consideration Section 23 of act provides that the object or
consideration of an agreement is not lawful when,
1, Forbidden by law 2, Opposed to public policy3, Defeats any provision of law4, Fraudulent 5, Court regard it as immoral
Agreements against public policy An agreement which tend to be injurious to the public or against the public good is
void as being opposed to public.1, Trading with enemy 2, Stifling prosecutions3, Maintenance and Chamberty 4, Agreements in restraint of legal proceedings5, Trafficking in Public offices and titles6, Agreements tending to create interest opposed to duty7, Contracts interfering with course of justice8, Agreements tending to create monopoly 9, Agreements in restraint of parental rights10, Agreements in restraint of marriage11, Agreements influence elections12, Agreements to defraud creditors or revenue authority
Void agreements – According to sec 2 (g) of Indian contract act 1872, a void agreement is an agreement which is not enforceable by law. The agreements which are not enforceable by law right from the time when they are made, Void ab intio
Uncertain agreements – An uncertain agreements means an agreement, the meaning of which is not certain or capable of being made certain. Such agreements are void and hence are not enforceable in a court of law
Wagering agreements – An agreement between two persons under which money or money’s worth is payable, by one person to another, on the happening or not happening of a future uncertain event is called a wagering agreement
Illegal agreements – Illegal agreements may be defined as the agreement which is expressly or impliedly forbidden by law (eg) by IPC
Contingent contract – section 31 of contract act defines a contingent contract as ‘a Contract to do or not to do something if some event, collateral to such a contract, does or doesn't happen’
Contracts of indemnity and insurance are common instances of contingent contract
Quasi contract – Contractual obligations are generally voluntarily created, but these are some obligations which are not contractual, but are treated as such by law. Such contracts are called Quasi contract
Performance of contract The act lays down “the parties to a contract must
either perform or offer to perform, their respective promises, unless performance is dispensed with or excused under the provisions of the act or of any other law”
It is only the promisee who can demand performance of the promise. The general rule is that “a person can’t acquire rights under a contract to which he is not a party”
Discharge of contract Meaning: “Discharge of contract means discontinuation of the
contractual relationship between parties. When the rights and obligations arising out of a contract are extinguished the contract is said to be discharged or terminated”
Mode of discharge:1, Discharge by performance I, Actual II, Attempted2, Discharge by mutual consent or agreement I, Novation II, Rescission
III, Alteration IV, Remission V, Waiver 3, Discharge by subsequent or supervening impossibility or illegality 4, Discharge by lapse of time5, Discharge of operation of law I, By the death of promisor II, By
insolvency III, By merger IV, By unauthorized material alteration6, Discharge by breach of contract
Remedies for breach of contract
1. Rescission of contract2. Suit for damages3. Suit for specific performances4. Suit for injunction5. Suit for quantum meriut
Contract of indemnity and Guarantee
Indemnity – make good the loss or to compensate the party for their loss.
A contract by which one party promises to save the other from the loss caused by him by the conduct of the promisor himself, or by the conduct of any other person is called “Contract of indemnity”
Guarantee – “A contract of guarantee is a contract to perform the promise or discharge the liability of a third person in case of default”
I, Specific guarantee II, Continuing guarantee
Bailment The word ‘Bailment’ is derived from the French word ‘baillier’ which
means deliver According to the act “A bailment is the delivery goods by one person
to another for some purpose, upon a contract that they shall when the purpose is accomplished, be returned or otherwise disposed of according to the direction of the person delivering them
Kind of Bailment – 1. Gratuitous 2. non Gratuitous 3. Pawn or pledge Pledge or pawn – The bailment of goods as security for payment of a
debt or performance of a promise is called pledge. The bailer in this case is called the pawner. The bailee is called the pawnee. So pledge is a kind of bailment
Agency Definitions of agent and principal: The contract which creates the relationship of principal and
agent is known as ‘agency’ The legal provisions pertaining to agency are contained in
sec182-238 of Indian contract actAgent – An agent is a person employed to do any act for,
another or to represent another in dealings with third persons
Principal – The person for whom such an act is done, or who is so represented is called the principal
Contract of agency – special features
1, Agreement 2, Fiduciary relationship3, Competency of parties4, consideration5, Basis of agency6, Intention of agent to act on behalf of
principal
General rule of agency The acts of the agents shall for all
legal purposes be considered to be the acts of the principal
A person is competent to do by himself, shall also be allowed to be done by agent
Classification of agentsAgents
Basis of extent of authority
Basis of nature of
workGenera
l
Special
Universal
Mercantile
Non Mercantile
Broker
Auctioneer
Commission
agentsDel
credere AgentsFactors
Insurance agentsSolicitor
s
Attorneys
Creation of agency
Express agreem
ent
Implied agreeme
nt
By ratificati
on
By operation
of law
By estoppel
s Holding
outNecessit
y
Del credere agents: A del credere agent is one who in consideration of an extra commission called del credere commission, guarantees to his principal that the third persons with who he enters into contracts shall perform their obligation
Agency by ratification: sec 196 of act states that when acts are done by one person on behalf of another, but without his knowledge or authority. He may elect to ratify or to disown such acts. If he ratifies then, the same effects will follows
Duties and rights of Principal
Duties of principal:1, Agent to be indemnified against consequences of lawful acts2, Agent to be indemnified against consequences of acts done in
good faith3, Compensation for agent for injury caused by his neglectRights of principal:1, When an agent deals on his own account, in the business of
agency without the principal’s consent 2, Right to benefit gained by agent dealing on his own account in
business of agency
Duties and rights of Agent Duties of Agent:1, Agent’s duty in conducting principal’s business2, Skill and diligence required from agent3, To make compensation4, To render accounts to his principal5, Duty to communicate with principal 6, Duty to pay sums received for principal Rights of agent:1, Agent’s right of retainer2, When agent’s remuneration becomes due 3, Agent’s lien on principal’s property
Delegation of Authority of Agent The rule ‘delegatus non potest delegare’ is enshrined in sec190 of the
Indian contract act 1872 Accordingly, an agent can’t lawfully employ another to perform acts
which he has expressly or impliedly undertaken to perform personally, unless by the ordinary custom of trade a sub-agent may or from the nature of agent must, be employed
Exceptions to general rule(sec 190):1, When principal permits delegation2, When an emergency requires delegation3, when expressly been provided that a sub agent will be appointed4, custom of trade permits delegation5, Nature of agency requires delegation
Sub agent: According to 191 of the act, it is a person who is employed by the original agent and who acts under the control of the original agent in the business of agency. Thus a subagent is the agent of original agent. It is like relationship of principal and agent
Substituted agent: According to sec 194, a person who is named by the agent holding an express or implied authority to name another person, to act for the principal in the business of the agency. Such a person is an agent of the principal for such part of business of the agency as is entrusted to him
Termination of agency An agency may be terminated by any of the
following modes:1, by the act of the parties a, by agreement between principal and
agent b, revocation of agency by principal c, Revocation by the agent
Contd…2, by operation of law a, by the performance of the control of agency b, by the insanity of principal or agent c, by insolvency of the principal d, by the expiry of time fixed for agency
contract e, by death of principal or agent f, by renunciation of employment by agent g, when the company is wound up h, on Principal becoming alien enemy I, on destruction of subject matter
Sale of Goods Act 1930 The sale of goods act came into force on 1st July
1930 and it extends to the whole of India except the state of J&K, all the legal provisions relating to the sale of movable goods are contained in the sale of goods Act 1930.
The transactions relating to immovable properties are governed by a separate act known as Transfer of property act 1882.
Contract of Sale and Sale ‘contract of sale is defined in 4(1) of the sale of
goods act “A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer for a price.
Sale – The term sale is defined in sec 4(3) of sale of goods act, where under a contract of sale, the property in the goods is transferred from the seller to the buyer, the contract is called sale.
Essential elements of contract of sale
1, Buyer and seller 2, Goods 3, consideration4, Transfer of property 5, Requirements of a valid contract
Making of contract of sale A contract of sale is made by an offer to buy or sell goods for a price and
consideration of such offer.A, Immediate delivery of the goods B, Immediate payment of priceC, BothD, For the delivery or payment by installmentsE, That the delivery or payment or both shall be postponed.A contract of sale may be made: 1, In writing 2, By word of mouth 3, Partly in writing and partly by word of mouth 4, may be implied from the conduct of parties
Subject matter of contract of sale Goods form the subject matter of
contract of sale 1, Goods perishing before making of
contract (sec 7)2, Goods perishing before sale but
after agreement to sell (sec8)
Sale and Hire purchase agreement A hire purchase agreement is not a contract of sale, but
only a bailment and the property in the goods remains with the owner during the continuance of the bailment
In other words, it is a bailment plus agreement to sell:The hirer has following 2 options of sale and hire purchaseA, He may purchase the goods after paying all the agreed
installments B, He may return goods at any time and stop further
payment of installments
Meaning of goods Goods means every kind of movable property
other than actionable claims and money and includes stock and shares, growing crops, grass and things attached to, or forming part of the land which are agreed to be served from the land before sale or under the contract of sale
Goods also include shares and stocks Goods excludes money and actionable claims
Documents of title to goods Sec2(4) A document of title to goods may be described as any document used
as proof of the possession of control of goods, authorizing or purporting to authorize, either by endorsement or by delivery, the possessor of the document to transfer or receive goods.
Sec 2(4) recognizes following are 1. Bill of lading2. Dock warrant3. Warehouse keeper’s certificate4. Wharfinger’s certificate5. Railway certificate6. Warrant or order for delivery of goods7. Any other documents used in ordinary course of business
Classification of goods
Existing goods sec(6)
Future Goods sec2(6)
Contingent goods
sec6(2)
Specific Goods
Unascertained goods
Ascertained goods
Price of goods Sec 2(10) of the sale of goods act has defined price as the
money consideration for a sale of goods.Modes of fixing the price :Sec 9 of the sale of goods act 1930 provides1, Fixation of price by contract of sale 2, Fixation of price in a manner provided in contract of sale3, Fixation of price by course of dealings4, Fixation of reasonable priceFixation of price by third party
Conditions and warranty 1. A stipulation in a contract of sale with reference of goods
which are subject thereof may be condition or warranty2. A condition is a stipulation essential to the main purpose
of the contract, the breach of which give rise to a right to treat contract as repudiated
3. A warranty is a stipulation collateral to the main purpose of the contract, the breach of which rises to a claim for damages, but not a right to reject the goods and treat contract as repudiated
Circumstances when a condition can be treated as warranty
Sec 13 of act provides for the situations in which a condition can be treated as warranty are
1, if the buyer waives the condition (or)2, if the buyer elects to treat the breach of
condition as a breach of warranty 3, If the buyer accepts the goods or a part thereof
in case the contract is not separable, unless there is a term in the contract to that effect
Implied conditions and warranty
1, warranty as to the title and possession (sec 14)
2, condition as to the description (sec 15)3, condition as to the quality of fitness (sec
16) 4, Condition as to the matching with sample
(sec 17)
Implied conditions and warranties
Implied conditions
Implied warranties
TitleSale by sample
Quality
Sale by description
Sale by description and
sampleMerchantable
qualityUsage of
trade
Quiet Possession
Against Charges and
encumbrances
Usage of tradeWholesom
ness
Implied condition as to quality or fitness (Caveat Emptor) sec 16
Sec 16 of act contains a very important doctrine, that is Doctrine of caveat emptor – “Buyer Beware”
There is no implied condition in a contract of sale of goods regarding its quality or fitness for the purpose of which the buyer is buying the goods
Buyer and seller are free to put up any condition in a contract of sale of goods either expressly or impliedly. In absence, the doctrine of Caveat emptor will apply as in sec(16)
Exceptions to The doctrine of Caveat Emptor
Sale by sample
Fitness for particular Quality
Concealment of latest defects by seller
Sale by description
Sale by sample and description
Merchantable Quality
Performance of sale contract
The term ‘performance of contract of sale’ may be defined as the respective duties of the seller and the buyer, as per the terms of the contract
Performance of contract of sale comprises of two parts namely,
1, Seller’s duty to deliver the goods2, Buyer’s duty to accept the goods and pay the
price
Rights of the buyer1, Examinations of goods2, Suit for damages for non- delivery 3, suit for specific performance4, Suit for breach of warranty5, In case of repudiation of contract6, Suit for interest
Rights of unpaid seller Sec 45 defines the meaning of unpaid seller as 1, When the whole of the price has not been paid or
tendered.2, When a bill of exchange or any other negotiable
instrument has been received as a conditional payment and the condition on which it was received has not been fulfilled by reason of the dishonor of the instrument
Rights of an unpaid seller against goods (sec46)
1, When property in goods have passed to the buyerA, Right to lien B, Right of stoppage of goods in transitC, Right of resale2,Where the property in goods has not passed to buyerA, Withholding of delivery of goodsB, Right to lien C, Right of stoppage of goods in transitD, Right of resale
Rights of unpaid seller against the buyer personally
1, Suit for price 2, suit for damages3, Suit for interestSeller’s lien (sec 47)Termination of lien (sec 49)Part delivery (sec 48)Duration of transit (sec 51)Stoppage in transit (sec 52)
Negotiable Instruments Act 1881 The Negotiable instruments acts doesn’t define a
negotiable instrument. A negotiable instrument is a transferable
document either by application of law or by custom of trade concerned
A negotiable instrument may be made payable to two or more payees jointly, or it maybe made payable in alternative to one or two or some of several payees.
Applicability The negotiable instrument act 1881,
extends to the whole of India except J&K and to all persons resident in India, whether foreigners or Indians came into force on 1st March 1881.
Deals with promissory notes, Bill of exchange and cheques
A negotiable instrument is a 1. Written Instrument 2. Signed by the maker or drawer of the
instrument 3. That contains an unconditional promise or
order to pay4. An exact sum of money 5. On demand or at an exact future time6. To a specific person, or to order, or to its
bearer.
Negotiable instrument – Key features
An instrument may be negotiable either by 1, statue or 2, By usage
An instrument is said to be negotiable if it possesses the following features:
1. Freely transferable2. Holder’s title free from defects 3. The holder can sue in his own name 4. A negotiable instrument can be transferred infinitum 5. A negotiable instrument is subject to certain
presumptions
Presumptions as to Negotiable Instruments
Sec 118&119 enlist the following presumptions as to negotiable instruments, unless the contrary is proved
1. Every negotiable instrument is deemed to have been made, drawn, accepted, endorsed, negotiated or transferred for consideration
2. Every negotiable instrument bear the date on which is made or drawn 3. Every bill of exchange was accepted within reasonable time4. Every transfer of a negotiable instrument was made before the date of its
maturity5. The endorsements appearing on it were made in the order in which they appear
thereon.6. The holder of the instrument is a holder in due course7. If a suit is filled upon an instrument which has been dishonored, the court shall,
on the proof of the protest, presume the fact of dishonor unless it is disproved
Discharge of negotiable instruments A negotiable instrument is said to be discharged when it
becomes completely unless (i.e) no action on that will lie and it can’t be negotiated further
After a negotiable instrument is discharged, the rights against all the parties thereto come to an end, and no party, even a holder in due course, can claim the amount of instrument from any party thereto
Discharge of party primarily and ultimately liable on the instrument results in the discharge of the instrument itself
Discharge of one or more parties A party is said to be discharged from his liability on
the instrument comes to an end When only some of the parties to a negotiable
instrument are discharged, the instrument continues to be negotiable and the un discharged parties remain liable on it
Thus the discharge of one or more parties to an instrument and rights under it can still be enforced against those parties who continue to be liable
Types of negotiable instruments1, by Statue – Cheque, Bill of exchange and promissory note and etc.,2, Documentary bill3, Inland instrument 4, Foreign Instrument 5, Inchoate instrument 6,Time instrument 7, Accommodation Bill8, Fictitious bill9,Clean bill 10, Ambiguous instrument
Promissory note (section 4)
A promissory note is 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 the instrument
Essentials of Promissory note
1. It must be in writing 2. It must contain a promise or undertaking to pay3. The promise to pay must be unconditional 4. The amount promised must be a certain and definite
sum of money 5. The instrument must be signed by the maker6. The person whom the promise is made must be definite
person7. The amount payable must be in legal tender money of
India8. Proper stamping should be made
Bill of Exchange (section 5) “A bill of exchange is an instrument in
writing containing an unconditional order, signed by the maker, directing a certain person to pay certain sum of money only to, or to the order of, a certain person or to bearer of the instrument “
Essentials of Bill of Exchange
1, The bill of exchange must be in writing 2,There must be an order to pay3, The order must be unconditional4, The drawee must sign the instrument 5. There must be two distinct person 6, The sum must be certain7, Medium of payment must be money and money
only
Cheques (section6) A cheque is bill of exchange drawn on
a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated and a cheque in the electronic form
Essentials of cheques 1. A cheque can be payable either to order or bearer2. A cheque is an instrument in writing 3. A cheque is payable on demand4. A cheque can be drawn only on the branch where the
customer is having an ccount5. Notice of dishonor is not neccesary in the case of
dishonor of cheques6. Cheques are not neccesary to present for acceptance7. Cheques are not required to be stamped in India
Different types of crossings of cheques
General crossing Special crossing Restrictive crossingTruncated Cheque:Cheque in the electronic form – use of digital
signature or biometric signature for verification of authorization
Holder in due course (sec9)
“Holder in due course” means any person who for consideration become the possessor of a promissory note, bill of exchange or cheque if payable to bearer, or the payee or endorsee thereof, if payable to order before the amount mentioned in it became payable and without having sufficient cause to believe that ant defect existed in the title of person whom he derived his title”
Types of Endorsement1, Blank/General Endorsement2, Full/ special Endorsement3, Restrictive Endorsement4, Partial Endorsement5,Conditional Endorsement6, Sans recourse Endorsement7, Sans frais Endorsement8, Facultative Endorsement
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