NEGOTIATION BY DELIVERY
This article focuses on Negotiation by Delivery. In the end, there will be a discussion on the Study Material for JAIIB NOV 2022
The JAIIB is offered by the Indian Institute of Banking & Finance (IIBF) twice a year in May and November as a career progression exam.
All banking professionals who meet the eligibility standards and work for institutions that are institutional members of the IIBF are eligible to take the JAIIB Exam 2022.
EXAM DATE OF JAIIB NOV 2022
This year’s JAIIB Exam will take place in November. The dates for the JAIIB Nov 2022 EXAM have been released by the IIBF and are November 12, 13, and 20.
Now that we know the JAIIB Nov 2022 Examination Dates, we will take our discussion forward by discussing Negotiation Instruments and then Negotiation by delivery.
NEGOTIATION INSTRUMENT MEANS
A document that ensures payment of a specific sum of money to a specific person is a negotiable instrument (the payee). It has a contract-like structure and demands payment either immediately or at a certain period.
A negotiable instrument is a piece of paper that guarantees payment of a certain sum of money to a certain person (the payee) and calls for payment either immediately or at a predetermined time.
Negotiable instruments can be transferred to new holders, who then take complete legal title to them, which makes them different from non-negotiable instruments.
CHARACTERISTICS OF NEGOTIATING INSTRUMENTS
- In a negotiable instrument, the word “negotiable” refers to the fact that it can be transferred to various parties. The new possessor acquires complete legal title if it is transferred.
- On the other hand, non-negotiable instruments are unalterable and unchangeable.
- Negotiable instruments give their owners the option of receiving the money in cash or transferring it to another party. The negotiable document specifies the precise sum that the payor is pledging to pay and requires payment either immediately upon demand or at a predetermined period. Negotiable instruments are signed by the issuer of the document, just as contracts.
There are various types of Negotiation Instruments
- Personal checks
- Traveler’s check
- Promissory notes
- Money Orders
- Certificate of Deposits
In this article, we will talk about Negotiation by Delivery. But to read about that, we first need to know what Promissory Notes are.
Promissory notes are written agreements between two parties wherein one party (the payor) promises to pay the other party (the payee) a specific sum of money at a future date. Promissory notes, like other negotiable documents, include all the pertinent details for the promise, such as the stipulated principal amount, interest rate, period, date of issuance, and payor’s signature.
Promissory notes are largely used to help people and businesses get finance from sources other than banks and other financial institutions.
NEGOTIATION BY DELIVERY
The Negotiable Instruments Act of 1881, Section 47 states:
A promissory note, a bill of exchange, or a check payable to the bearer is negotiable by delivery of the instrument, subject to the limitations of section 58.
Exception: A promissory note, bill of exchange, or check delivered with the proviso that it won’t go into effect unless a specific circumstance occurs which is not negotiable (unless in the hands of a holder for value without knowledge of the proviso).
(a) A gives a negotiable instrument payable to the bearer to B’s agent to maintain on B’s behalf. The agreement has been reached.
(b) A directs the banker of A, who is currently the banker of B, to transfer the instrument to B’s credit in the banker’s account with B. A is the holder of a negotiable instrument payable to the bearer that is in the banker’s possession. As a result, the banker now has the instrument in their possession as an agent for B. The agreement has been reached, and B is now the owner of the instrument.
- The Transferor’s position after delivery
- When a negotiable instrument payable to the bearer is transferred by delivery, the effect is the same as selling the item, and the transferor’s obligations are similar to those of a seller of goods. As such, transfer endorsement is not required, his name is obviously not on the instrument, indicating that he is not a party to the instrument. As he has not lent his credit to the instrument, he is also not liable to the transferee upon the instrument as such.
- According to what appears to be the negotiation by mere delivery, no subsequent holder can bring a claim against the transferor based on the instrument or the breach of warranties because there is no contractual privity between them. Instead, only the immediate party is entitled to compensation in the event that any of the implied warranties listed above is violated. Neither morals nor the laws of this country will require the owner of a bill who submitted it to market without signing his name to return the money he received for it if he did not know at the time that it was sold that it was a bad bill.
Read Also: JAIIB EXAM NOVEMBER 2022 NOTIFICATION
JAIIB NOV 2022 STUDY MATERIAL
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