Section 13 of the Negotiable Instruments Act defines that a negotiable instrument means a promissory note, bill of exchange or cheque, payable either to order or bearer.
- The property in it passes either by mere delivery or by endorsement and delivery
- The holder in due course is not affected by the defect in the title of his transferor or any previous party.
- The holder in due course, can sue in his own name. He need not give notice to the debtor that he has become the holder.
- He is not affected by certain defects like fraud to which he is not a partly
- Consideration is presumed to have passed
- It is convenient method of discharging payments
The Act does not stipulate that only bills of exchange, promissory notes and cheques are only the negotiable instruments. So, other instruments may also be added to the list of negotiable instruments provided.
- They are transferable by mere delivery and
- The holder in due course can sue in his own name
Hence, Dividend Warrants, Port Trust or Improvement Trust Debentures, Railway Bonds, payable to bearer or Railway Receipts having the feature of negotiability are all negotiable instruments. So, a negotiable instrument is an ordinary chattel for chose-in-action clothed with the feature of negotiability.
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