Negotiable Instrument Act 2034

•  Difference in words and amount : Amount in words must given first priority

• Drawer – The person or entity that writes (issues) the check or bill of exchange. They instruct the payment.

• Drawee – The bank or financial institution that is directed to pay the amount mentioned in the check or bill of exchange.

• Payee – The person or entity who is supposed to receive the payment.

• Bill of Exchange : written order by one party (drawer) directing another party (drawee) to pay a fixed amount of money to a third party (payee) either immediately (on demand) or on a future date. The payment order cannot have conditions

• Promissory Note: is a written financial instrument in which one party (maker) promises to pay a specific amount of money to another party (payee) at a fixed future date or on demand. It is a legal document that serves as a debt acknowledgment. 

• Two party involved in P. Note unlike three party in BOE

• Validity of Cheque or Draft is maximum 6 months from date of issue 

• Crossed Cheque - > General Crossing:

• Two parallel lines with or without "Account Payee" or "& Co."

• Cannot be encashed directly; must be deposited into a bank account

• // or // & Co.

•  Special Crossing:

• Two parallel lines with a specific bank’s name written between them

• Can only be deposited into the mentioned bank

• // ABC Bank 

• Restrictive Crossing (A/C Payee Crossing)

• Two parallel lines with "Account Payee Only" written between them

• Can only be credited to the payee’s account and cannot be endorsed further

• // Account Payee Only

• Not Negotiable Cheque

• Transferable but with Restrictions (can transfer the cheque to someone else (like passing it on to a different person), but they won't get full rights to the cheque like the original owner. This means that if the cheque was stolen, the new person who gets it cannot claim the money if the original owner reports it lost or stolen.)

• Limited Ownership (If you transfer a "Not Negotiable" cheque to someone, they only have the rights that you had. They can't make any further claims or use it to their advantage in a way the original owner couldn’t.)

• Ram writes a cheque for Rs.100.00 and crosses it with "Not Negotiable". Ram gives it to Nita (let's say Nita is a friend). If Nita loses the cheque or it gets stolen, she cannot take legal action to claim the money. The rights to the cheque remain limited to the original holder’s (Ram's) ownership.

•  Drawer can cancel the crossing in the cheque if wishes to