Case Study on Negotiable Instrument Act


State with the reason whether the following payment amount to payment in due course :-

  1. A bill exchange is payable at a future date is paid before maturity.
  2. An instrument is paid before maturity and is successfully endorse to another person
  3. Any instrument is payable to A or his order and it is not endorsed by him it is paid to B who is in actual possession of the instrument.
  4. An instrument payable to bearer, all endorsed in blank, payment to a person in position of the instrument.



The given case is under the chapter of negotiable instrument which means promissory notes, bills of exchange or cheque payable either to order or to bearer

  1. The payment is done in due course when payment is made at or after maturity of bills of exchange to its holder in good faith and without notice that his or her title to the bill is defective therefore here payment before maturity period does not comes under payment in due course.


  1. As per the negotiable instrument act. Due course refers to payment made at a good faith with the belief that it is valid, with no knowledge of any defects here because of endorsing it to the another person successfully without having any defect at the time of negotiation we can say this situation is under the payment in due course.


  1. A is an actual possession of the instrument as the principal instrument holder is A. therefore A is the holder in due course. whereas A need to pay the amount to B therefore here with A’s order the instrument is paid to B .


  1.  here an instrument is payable to bearer, all endorsed in blank, payment to a person in position of the instrument here blank endorsement means if the endorser signs his name only and does not specify any person to whom it should pay is called blank endorsement. Therefore in this set case the true owner however he is entitled to recover the amount from the finder. Similarly finder negotiate the bill, to a holder in due course, the holder gets good title and can obtain payment from the party.






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