Question

Samina sold her car to Faiz for Rs. 800,000. Faiz draws a bill of exchange stating “Pay to Samina or her order a sum of eight hundred thousand rupees”. In figures the amount is stated as Rs. 80,000. Under the Negotiable Instruments Act, 1881 explain whether it is a valid bill.

its business law subject

Answer 1

Section 4 of the Negotiable Instruments Act, 1881 defines the promissory note to be an instrument in writing signed by maker to pay a specified amount to a specified person or bearer of the instrument.

-- The instrument should contain an express promise to pay

-- It should be in writing

-- The instrument should be signed by the maker

-- It must be definite and unconditional

-- The instrument should point out with certainty as who the payee is or to who the maker is.

-- The payment have to be in the legal tender money of India

-- It must not be capable of contingent additions or subtractions

In the given situation, amount is stated differently in words and figures; and as per the act the amount stated in words would deemed to be the amount undertaken or ordered to be paid. It will be a valid bill