12. Insurance
A negotiable instrument is a signed document that promises a payment to a specified person or assignee.
Features of negotiable instruments
- Written documents must be used
- Easily Transferable
- Payees must also be specific
- The time of payment must be certain
Types of negotiable instrument
- Commercial bill
- Promissory note
- Cheque
- Commercial paper
- Treasury bills
- Bank draft
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.
Drawee – 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.)
Payee – 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.
Acceptor – 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.