Understanding the Legal Requirements of Digital Signatures for Notice of Promotion in United States

How to eSign a document: digital signature lawfulness for Notice of Promotion in United States

[Music] you welcome in this session we are going to learn about the meaning of negotiable instruments different types of negotiable instruments different types of crossing duties of a paying banker different types of endorsements dishonor of negotiable instruments noting and protesting of negotiable instruments so let us try to first understand what is meant by and negotiable instruments the word negotiable means transferable from one person to another and the term instrument means any written document by which a write is created in favour of some person thus the negotiable instrument is a document by which rights vested in a person can be transferred to another person in ance with the provisions of negotiable instrument act 1881 the main features of a negotiable instrument can be stated this way it can be either by way of a statute or by way of usage statute means what has been mentioned in the negotiable instrument act say promissory note Bills of exchange cheques are negotiable instruments under the Act by usage banknotes dot share warrants bearer debentures dividend warrant scripts Treasury bills these are all negotiable by usage negotiable instrument can be defined as stated in the Act but it merely states in Section 13 of the Act that a negotiable instrument means of promissory note bill of exchange or check payable either to order all to the bearer of the instrument so it means an instrument may be negotiated by law or by custom / exemptions relating to negotiable instruments have been mentioned in the negotiable instrument Act section 118 and hundred and nineteen of the Act has certain presumptions one it shall be presumed that every negotiable instrument is drawn for consideration so consideration is an important aspect every bill is accepted within a reasonable time before its maturity this is the second considered thing third the instruments are endorsed in order in which they appear on it and finally every holder is presumed to be a holder in due course we will see a little later what is the meaning of a holder and the whole range of course the instruments are classified in different ways number one bearer instruments that is instruments are payable to the bearer order instruments the instruments which are expressed to be payable to the order inland instruments those instruments which are drawn and made in India upon any persons resident in India even though payable in a foreign country and then foreign instruments those instruments not in not inland but may be drawn outside India and made payable outside or inside India further the instrument can also be classified as ink weight or incomplete instruments when a person signs and delivers instrument which is wholly blank or incomplete and gives the authority to make it complete to the holder these instruments are called as inchoate or incomplete instruments then we also know there are accomodation bills a bill drawn accepted or endorsed without consideration party intending lending its name to obliged to the other party accommodating or accommodation party the party so obliged is called as party accommodated then we have trade bills when a bill is drawn accepted or endorsed for consideration it is called as genuine trade bill escrow when a negotiable instrument is delivered conditionally or for a special purpose as a collateral security or for safe custody only and not for transacting absolutely it is called an escrow section 4 of the negotiable instrument Act talks about promissory notes what is a promissory note it's an instrument in writing not being a bank note or a currency note it contains an unconditional undertaking sign for the maker to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instruments so now we know that the promissory note requires two parties one is called as a maker another is called as a pain maker is one who makes our execution note promising to pay the amount stated in the promissory note payee the person to whom the amount is payable is called as payee to comply with other formalities also is important in respect of a promissory note that means it should contain a date the place should be mentioned in the promissory note there should be consideration and it should be adequately stamped if a negotiable instrument is payable to bearer it is negotiated by mere delivery and if it is payable to order it is negotiated by endorsement and delivery a little later we will see what is meant by endorsement section 5 of the negotiable instrument Act talks about Bills of exchange it is defined in the act as an instrument in writing containing an unconditional order signed by the maker directing a certain person to pay a certain sum of money only to all to the order of a certain person or to the Baron of the instrument so see there are two three things number one it should be in writing there should be unconditional order it should be signed by the maker and directing a person to pay a certain sum of money these all these things are important to understand what is meant by a bill of exchange basically it is an order to the culture of the creditor to the debtor to pay a certain sum of money to the person named therein now there are parties to the bill of exchange who are they one is draw over the person who draws the bill in the second one is a drawing the person on whom the bill is drawn then accept her a person who accept the bill endorser a person who endorses the bill in favor of another person in Dorsey a person in whose favor the bill is endorsed and normally the bills are drawn in set of three which are called as why are we I a the whole set of whole set constitutes only one bill let us move forward and see what we understand by a cheque section 6 of the negotiable instruments Act defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand so a check is drawn on a specified banker this is very very important to be noted and it includes electronic image of a truncated check and check in electronic form we are going to understand these two technologies little later so cheque is a bill of exchange with a difference that it is always drawn on a specified banker it is payable only on demand what do you mean by electronic check or a truncated check let us try to understand these two technologies a check in the electronic form means a check which contains the exact mirror image of a paper check and heat generated and signed in a secure system with digital signature and a symmetric cryptosystem our truncated check means a check which is truncated during the clearing either by the Clearing House or by the band pane or the receiving payment checks are being crossed what is meant by crossing of a check if the drawer of the check wants to ensure safety and also wants to get an audit trail of payment he may further direct the pain banker to pay the check only through the account of the pain so crossing of the check fulfills the Mandate of the drama section 123 to 131 of negotiable instrument Act deals to the subject of crossing of the cheques these provisions are also applicable to bankers cheques pay orders and drafts what are the different types of crossing let's have a look at it section 123 and 124 deal with two types of crossing that a general Crossing and special crossing what do we mean by general crossing general crossing means drawing two parallel transverse lines across the face of a cheque the crossing may include such words as and company or not negotiable in between that can force parallel lines the effect of general crossing of the check is that the same is to be paid only through a bank account only and among cannot be paid across the counter to the presenter of the cheque let us have a look at the the specimen of general crossing here you find two transverse lines and in between the words and Co account payee not have been written let us try to understand what is meant by special crossing if the check bears across its face in addition to the crossing the name of a banker the check is deemed to have been crossed especially to that banker the effect of crossing is that the proceeds of the check should be paid only to that banker because of this reason the bank's put crossing stamp on checks received by them for collection now you can have a look at the specimen of special or a restrictive crossing you will find in each of these specimen the name of the bank is written so that is what is meant by special crossing types of crossing not negotiable Crossing what it means this type of crossing would remove the negotiable character stick of the instrument and the transferee cannot have a better title than what the transfer had section 130 of the negotiable instrument act state that a person taking a check cross generally or specially bearing in either case of the words not negotiable shall not have and shall not be capable of giving a better title to the check than that with the person from whom he took it so not negotiable Crossing means that the title which the person is going to get will not be a better one than the transfer had it account pay crossing so in order to add more protection to the check sometimes the word like account payee or peace account only are added to the crossing this type of crossing has been provided for in a negotiable instrument Act it has not been provided for in the negotiable instrument Act but it is a practice widely followed these words constitute a direction to the collecting bank to collect the proceeds in the finish account only and such instructions the Lord take away the characteristics of negotiability the account payee crossing has not been provided for negotiable in the negotiation student Act but it is a practiced widely followed now let us have a look at one more point whether a check can be crossed after it is issued if the check is not cross the holder of the Technic receipt either generally or specially if the check is caught generally the holder may cross it specific officially also the holder may add the words not negotiable to the crossing what are the duties of the paying banker section 126 lays down the duty of paying banker and this provision makes it obligatory on the part of the paying banker to pay the cross checks only through a bank account if he doesn't the banker is going to be liable when a check why whose crossing has been opened sometimes a client comes cancels a crossing that is called as opening of the cost when it is prevented for cash payment or the counter the banker will have to take certain precautions before making payment what are those precautions one opening of crossing is authorized by the signatory of the check clear instructions should be there crossing open please pay cash and the payment is made to the drawer of the check only and not to anyone else and if a third party present by chance then the tower needs to be contacted to ascertain before making the payment that the person who has come and who is asking for payment is a genuine and easily the drawers representative and finally if the check is not for big is for big value if it is for big value fresh check should be called for what is payment in due course is another important aspect which all of us must learn section 10 of the negotiable instrument act lays down the conditions under which payment is said to be a payment in due course what are the conditions which are required to understand this topic payments should be made in ance with the apparent dinner that is what it appears on the face of the instrument the payments should be made to the person in position of the instrument where the instrument is made payable to a particular person or order and if the instrument is not endorsed by him payment a person on actual position of instrument will not amount to a payment in due course this point needs to be noted very carefully there are occasions when banker must refuse payment what are those points on which the banker should be very strict and can refuse and must refuse the payment so they are number one where the customer gives top payment instructions that is counter matzoh payment number two on receipt of notice of customers debt number three on customer becoming insolvent number four on receipt of a notice of the customer's insanity number five on the seat of garnishee order number six on assignment of credit balance and number seven on suspicious misused by a trustee let us move forward and try to understand some more terminologies what is meant by endorsement section 15 of the negotiable instrument Act defines endorsement which means signing on the reverse of the instruments or even on the piece of paper called a launch for the purpose of negotiating the negotiable instrument if the end officer signs only his name without adding any instructions or direction the endorsement is called a blank endorsement this is mentioned in section 16 one of the negotiable instrument Act what are the different kinds of in document endorsement in blanked which were already seen that if there is only name of the endorser payable to the bearer special endorsement or endorsement in full if it is made to a specified person it is called an endorsement in full Santikos endorsement it excludes his personal liability by limiting the liability conditional endorsement if a condition is specified by the endorser it is called that conditional endorsement restrictive endorsement means if it is specified to one person only it is called as a restrictive endowment facultative endorsement if the provisions of giving notice of dishonor is waived it is called as faculty - in document here on the specimen of endorsement on the left side you'll see blank endorsement and on the right side you'll see special endorsement where the name of a person has been specified let us also try to understand what is meant by holder this has been mentioned in section 8 of the negotiable instrument Act a person who is entitled to hold a negotiable instruments in his own name to possess the instrument and to recover or receive its amount due from the party is called as a holder to be a holder a person must been named in the instrument as payee or the endorsing or it should be bearer there are what is meant by holder in due course if a person proves that he acquired the instrument for a valuable consideration then he is known as holder in due course the holder in due course should show that for consideration he became the payee or endorsee of the instrument if it is payable to the order in such cases the instrument should have been endorsed and delivered to him as this titled instrument will be incomplete without delivery what are the responsibilities of paying banker this is an important point which the all bankers first know under section 31 banker is an obligation to ask honor the customer check subject to certain conditions in order that the drawee Bank execute his customers mandate the customer should observe reasonable care in drying the checks so what are the points which a banker should look at number one the checks should bear a date the mandate of the customer should be clear as to whom the money's to be paid the amount of the check should be written in words and figures and the space provided for it the draw all signatures should be as per the specimen kept on the banks record so the banker has to up obviously see all these points and then make the payment protection to the banker as well as banks under the cheque truncation system all of us know that the Reserve Bank of India has given instructions for cheque truncation system and check should be in the CTA's format so here in order to protect the banker as well as the customer certain guidelines have been given what are those guidelines let us have a look at it so no changes to Corrections can be carried out on the cheques other than for the date validation purpose if required for any change in page name amount in figures amount in words fresh cheque loose need to be used by the customers so unique any cancellations are there no checks cannot be honored by the bankers this would help the banks in identifying and controlling the fraudulent alterations let us now have a look at the responsibilities of a collecting bank the collecting banker plays a dual role as paying banker and collecting banker section one thirty one of the negotiable instrument acts for whites for protection to a banker receiving payment of a check under certain conditions the collecting banker should receive payment for a customer protection under Section 131 is available only to the cross-checks and that such crossing should be done before the banker accepts the check for connection the protection is available only when the collecting banker receives a payment for his customer and not for non customers this is also one of the important point which should be noted instances where the connecting banker will be held responsible are quite a few number one collecting a check payable to the company or a trust in private account of the director or a trustee the banker can be responsible collecting checks for large very large sums in an account which has otherwise low operations so the banker will be questioned collecting checks payable to the order without verifying the endorsements then collecting the check crossed account pay in an account other than the paint the banker can be held responsible collecting the check in an account which is not properly introduced so the banker doesn't get protection collecting the check in a third party's account without proper precautions so these are the points where the banker can be held responsible and the banker should be aware of these points before collecting the check now instruments are sometimes dishonoured what is meant by dishonor of a negotiable instrument this honor of a negotiable instrument happens due to non acceptance of the bill or non-payment of the instrument dishonor by non-payment happens when the maker drawing of the cheque or acceptor of the bill makes a default in payment upon being duly required to pay the same it is considered to be dishonored by non-payment when the presentment for payment is excuse and the all-new amount remains unpaid dishonored by non-acceptance happens in the following ways the one when the droid does not accept within 48 hours of the presentment number two when the presentment for acceptance is excused and the bill remains an accepted number three when the drawing is incompetent number four when the acceptance by the drawing is qualified number five when the drawing is fictitious person or cannot be found after reasonable search so in all these such cases a notice of dishonor is a must to all prior parties who the holder wants to make libel except in those cases where the law considers it as unnecessary noting and protest what is his noting in protest it's the process of recording dishonor by the notary public upon the instrument within a reasonable time of dishonor it is the discretion of the holder to get it noted or not a bill that is noted must contain the facts of the dishonor the date and the reasons it will also have the notary charges when the process of noting is certified it is called as protest in case of the zone of check which is covered in section 138 142 of the negotiable instrument Act it provides for criminal penalties in the event or design of checks for insufficiency of funds the driver of the check if the check is dishonoured may be punished under Section 138 with imprisonment for a maximum period of two years and this has been done after the amendment which was passed in the year 2002 he may be imprisoned or he may be fine which may extend to twice the amount of the check or with both it all depends upon the view taken by judge the amendment has inserted five new sections section 143 to 147 for the procedure to be followed for trial what are the conditions to attract criminal penalty under Section 138 let's have a look at it this check is dishonored due to insufficient sub funds the payment for which the check was issued was for discharge of a legally enforceable debt or a liability in whole or in part so if it is a gift then the liability will not arise so in that case section 138 will not be applicable the check has to be presented to the paying bank within three months from the date of its drawn the page should have been given a notice of dissolved of the check the driver will be liable only if he fails to make the payment within the notice period the pay of the check should have made it a written complaint within one month of the cause of action so one these things are followed a trial can be filed in a criminal court and depending on the case and the depending on the amount the judge will take a view about the action or the fine which is to be imposed thank you very much