NI Act_Practicle Problems_31

‘A’ signs, as maker, a blank stamped paper and gives it to ‘B’, and authorises him to fill it as a note for Rs. 500, to secure an advance which ‘C’ is to make to ‘B’. ‘B’ fraudulently fills it up as a note for Rs.2,000, payable to ‘C’, who has in good faith advanced Rs. 2,000. Decide, with reasons, whether ‘C’ is entitled to recover the amount, and if so, up to what extent?

NI Act_Practicle Problems_30

Which of the following is a bill of exchange? Give reasons.

a. “To Anderson, Dear Sir, We hereby authorise you to pay on our account, to the order of Wolf, the sum of six thousand rupees.”

b. “Rs. 500.” “Pay to my order the sum of five hundred rupees, for value received.” It is neither signed by any person as drawer nor addressed to any person as drawee. It is accepted by Lam.

Sec.5 of the Negotiable Instruments Act reads as “A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money, only to, or to the order of a certain person or to the bearer of the instrument.”

a. In the given case there is no definite order to pay the sum of money. So, it is not a bill of exchange.

b. In the given case, drawee is neither named nor indicated with certainty. So, it is not a bill of exchange.

NI Act_Practicle Problems_29

A bill is drawn as "Pay to X or order the sum of ten thousand rupees". In the margin the amount stated is Rs 1,000. Discuss the legal position.

NI Act_Practicle Problems_28

State, giving reasons, whether the following instruments are valid promissory notes - (i) X promises to pay Y, by a promissory note, a sum of Rs.5,000, fifteen days after the death of B. (ii) X promises to pay Y, by a promissory note, Rs.500 and all other sums, which shall be due.

a. The future event i.e. death of B is certain, though date is uncertain. The instrument is valid.


b. The sum payable is not certain. Hence, it is not a negotiable instrument.