Types of negotiable instrument

what is the negotiable instrument and its types – Negotiable Instruments Act was enacted in 1881 and came into force in 1882. Negotiable Instruments Act, 1881 provided law relating to the negotiable instruments.

In this modern commercial world, negotiable instruments play a significant role as it is freely and easily transferable. Negotiable Instruments are transferable instruments. It is time-saving with no formalities. Negotiable instruments are must be in writing

what is the negotiable instruments?


Negotiable Instruments consist of two words i.e negotiable and other is instruments which means a document that is transferable by delivery. In a monetary and commercial transaction, some instruments us as money is called as negotiable instruments. Instruments which are negotiable is also known as negotiable instruments

what is the negotiable instrument and its types


According to Section 13 of the Negotiable Instruments Act, 1881 A “negotiable instrument” means a promissory note, bill of exchange or cheque payable either to order or to bearer.

Types of Negotiable Instruments-

1)Promissory notes

2)Bill of exchange


1)Promissory notes

  • A promissory note is an instrument in writing.
  • They are unconditional undertakings.
  • The maker of a promissory note agrees to pay a certain sum of money to the particular person or to the bearer.

2)Bill of exchange

  • A bill of exchange is an instrument in writing.
  • In a bill of exchange maker of bill direct particular person to pY money to a specific person or its bearer.
  • A bill of exchange should be in writing and it cannot be oral.


The cheque is one of the most important types of negotiable instruments. According to Section 6 of the Act defines “A cheque is a bill of exchange drawn on a specified banker, and not expressed to be payable otherwise than on-demand”

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