NI Act_Practical Problems_10

M draws a cheque in favour of N, a minor. N endorses it in favour of P. The cheque is dishonoured by the banker on the ground of insufficiency of funds? Discuss the rights of R

Section 26 of the Negotiable Instruments Act, 1881 provides that a minor may draw, endorse, deliver and negotiate instruments so as to bind all parties except himself.

Thus, in the given problem, P shall have a right to proceed against M only. N, the minor, cannot be held liable.

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.

NI Act_Practical Problems_8

State whether the following instruments are valid promissory notes : --

(i) I promise to pay Rs. 5,000 to Bon the death of B's uncle provided that D, in his will, gives me a legacy sufficient for the promise of payment of the said sum.

(ii) I hereby acknowledge that I owe X Rs. 5,000 on account of rent due and I agree that the said sum will be paid by me in regular monthly instalments.

(iii) I acknowledge myself indebted to B in Rs. 5,000 to be paid on demand for value received.

(iv) 'X' promises to pay 'Y' a sum of Rs. 10,000 six months after Y's marriage with 'Z'

(i) It is not a promissory note because it does not contain an unconditional promise, the amount being payable only if uncle leaves sufficient legacy.
(ii) Again, it is not a valid promissory note because the amount of monthly instalment is not specified.
(iii) It is a valid promissory note since it fulfils all the requirements of a promissory note as per Section 4 of the Negotiable Instruments Act.
(iv) It is not a valid promissory note, the promise being conditional—the condition being Y's marriage with Z.

NI Act_Practical Problems_7

"I promise to pay B Rs. 500 and all other sums which shall be due to him." State whether it is promissory note even if the instrument is signed by A.

The instrument in question is not a promissory note since it fails to satisfy one of the essential requirements of a promissory note as per Section 4 of the Negotiable Instruments Act, that is, it should be a promise to pay a certain sum of money. Thus, the amount must be certain or capable of being made certain. Since, the instrument in question lacks this feature-- "Rs. 500 and all other sums which shall be due", the words "all other sums" make the amount indefinite.

Contract Act_Practical Problems_43

A took a bet of Rs. 500 with B that a certain horse would win a race. Under this agreement A had to deposit Rs. 100 with B. Since A had no money, he approached his friend C, who advanced the sum to him on the condition that A was to return Rs. 200, if A should win bet against B, but to return nothing, if A lost, A won his bet against B. Can C recover Rs. 200 from A?

No- C cannot recover Rs. 200 from A. Section 30 of the Indian Contract Act declares all wagering agreements as void ab inito. The contract between A and C is itself a wagering agreement as between A and B.