Section 14 NI Act: Negotiation

Negotiable Instruments Act, 1881

Section 14 NI Act at a Glance

Section 14 NI Act defines negotiation as the transfer of a promissory note, bill of exchange, or cheque to any person in a way that makes that person the holder of the instrument.

Section 14 NI Act Bare Act Text

14. Negotiation.

When a promissory note, bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated.

Section 14 NI Act in Simple Words

Section 14 NI Act defines what it means for a negotiable instrument to be negotiated. When a promissory note, a bill of exchange, or a cheque is transferred to any person so as to constitute that person the holder of the instrument, the instrument is said to be negotiated.

A transfer amounts to negotiation under Section 14 NI Act only when it makes the recipient the holder of the instrument.

When Section 14 NI Act Applies

  • The instrument is a promissory note, a bill of exchange, or a cheque.
  • The instrument is transferred to a person.
  • The transfer constitutes that person the holder of the instrument.

Example of Section 14 NI Act

Bhavna in Amritsar holds a cheque for ₹30,000 made payable to bearer. Bhavna hands the cheque over to Gopal, and Gopal becomes its holder. Because the transfer constitutes Gopal the holder of the cheque, the cheque is negotiated to Gopal under Section 14 NI Act.

FAQs on Section 14 NI Act

What is Section 14 NI Act?▼

Section 14 NI Act defines negotiation under the Negotiable Instruments Act, 1881. When a promissory note, bill of exchange, or cheque is transferred to any person so as to make that person the holder of the instrument, the instrument is said to be negotiated.

Does every delivery of a cheque count as negotiation under Section 14 NI Act?▼

No. Under Section 14 NI Act, an instrument is negotiated only when it is transferred so as to make the recipient the holder.

Which instruments can be negotiated under Section 14 NI Act?▼

Promissory notes, bills of exchange, and cheques. Those are the three instruments named in Section 14 NI Act.

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Disclaimer: This is for informational purposes only. Always consult a qualified advocate for legal advice.

Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·