Meaning and definition of Negotiable Instrument -
According to Black's dictionary of Law Negotiable instrument is written and signed the unconditional promise or order to pay the specified sum of money on demand or at a definite time payable to order or bearer.
There are two types of Negotiable Instruments -
1) Negotiable instrument by statute
2) Negotiable instrument by custom or usage.
Read in Detail >>>> Kinds of Negotiable Instruments
Parties to Negotiable Instrument -
Drawer - The person who writes the bill of exchange or Cheque is called a drawer.
Maker - The person who writes the promissory note is called the maker.
A person to whom the bill of exchange or cheque is drawn or written is called drawee. (The drawee of the cheque is always a banker.)
The specified person with the instrument, to the payment of money is directed or on whom an order of the payment of money is directed, is called a payee.
When drawee of a bill of exchange or on its any part agreeing with it and informs the holder or any person on behalf drawee is called acceptor.
Endorser - The person or payee who endorses the instrument to any other person is called Endorser.
Endorsee - The person, in whose favor, the instrument is endorsed, is called an Endorsee.
Drawee in case of need -
When a person other than a drawee is mentioned in the negotiable instrument to whom the holder may contact for payment in case of need, the person or drawee is called a Drawee in case of need.
Acceptor for honour -
When a bill of exchange has been refused and any person accepts for the honor of drawee or endorser, the person is called Acceptor for Honor.