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Negotiable Instruments in Business Law - Article Example

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In India, the law regarding negotiable instruments like bills of exchange, checks, promissory notes etc. is codified under Negotiable Instruments Act 1881. Any person or agent or proxy who transacts a promissory note or check or any other instruments are bound by this Act…
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Negotiable Instruments in Business Law
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Negotiable Instruments in Business Law

Download file to see previous pages... Sections 134 to 137 of CHAPTER XVI of the Act relate to International Law. Section 134 regulates the jurisdiction of a foreign instrument;. The liability of the drawer of the instrument will be governed by the law of the place. Likewise, the liability of the holder or acceptor will be regulated by the law of the land of the receiver. Section 135 deals with the place of honoring the instrument. If the place of payment differs, then the matter of honoring it will be decided upon by the law of the place of payment. As per S. 136, if a negotiable instrument is drawn outside India (but) according to Indian Law, that instrument will be valid in India, even though the same is invalid in the place of drawing and accepting it. The last Section promulgates that any foreign country is considered as India in the matter of transacting the negotiable instrument, if not proven otherwise.
The legal issue raised in this article is about the provisions contained in Indian Negotiable Instrument Act 1881. Here the modus operandi of the fulfillment of the transaction and its subjectivity and objectivity together with its bindings are discussed in detail. Additionally, the liability and stipulations about the governing jurisdiction on the negotiable instrument transacted are explained.
Discuss realistic solutions supported by sound legal and business principles.)

One can find many defenses to shun responsibility on negotiable instruments and elements connected with forgery, fraud and alterations in relation to negotiable instruments. For instance a drawer of a check can escape its payment by stopping its payment. But such stopping of payments through checks can be done by the drawer in case the check is declared missing or lost. But this loop hole in the law of negotiable instruments Act has been used by many a drawer so that they can escape their debt or liability. Even the amendmentof 1988 to Section 138 of the Negotiable Instruments Act remained silent about stopped payment.
Section 138 of the negotiable instruments act of 1881 deals with statutory offence in the matter of dishonour of cheques on the argument of deficiency of funds in the account preserved by a person with the banker. Section 138 of the Act can not be termed as falling in criminal act but they are prohibited under the penalty in public interest. Generally in criminal law presence of guilty intent is an important ingredient of a crime. But the Legislature has the right to create an offence of unlimited liability or stern liability where 'mens rea' is not at all required.
The Kerala High Court in K. S. Anto v. Union of India held that:
"Knowledge or reasonable belief, that pre requisite could be statutorily dispensed with in appropriate cases by creating strict liability offences in the interest of the Nation."
In addition the creation of the strict liability is an efficient measure by promoting greater alertness to avert usual heartless or otherwise stance of drawers of cheques in release of debts or otherwise. The terms as ...Download file to see next pagesRead More
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