Friday, October 12, 2007

NI Act_Practical Problems_9

A promise to pay B Rs. 550 and all other sums which shall be due to him'. Is it a promissory note? State reasons.

It is not a promissory note since the amount payable is not a certain sum. The expression 'all other sums which shall be due to him' makes the amount indefinite or incapable of being made definite. Section 4 of the Negotiable Instruments Act which defines Promissory Note reads :

A 'promissory note' is an instrument in writing (not being a bank note or currency note) 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. Thus, to constitute a valid promissory note, the amount payable must be a certain sum or capable of being made certain. In fact, the problem in question is an illustration (d) to Section 4 stating that such an instrument is not a promissory note.

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