Negotiation of Negotiable Instruments
Exam-oriented guide with Bangladesh context
📑 Table of Contents
1) Meaning of Negotiation
Negotiation is the transfer of a negotiable instrument so that the transferee becomes the holder with the right to receive payment and sue in own name.
👉 Simple formula: Negotiation = Transfer of Title + Rights
2) Essentials & Effects
- Instrument must be negotiable by law/custom.
- Transfer should be before maturity to enjoy HDC rights.
- Transferee must act in good faith and for consideration.
- Title passes completely—HDC may even get better title than transferor.
3) Methods of Negotiation
🔹 Bearer Instruments
Negotiated by delivery only.
🔹 Order Instruments
Negotiated by endorsement + delivery.
4) Types of Endorsement
- Blank: Just signature, becomes bearer.
- Special: Specifies endorsee.
- Restrictive: “Pay A only” → stops further transfer.
- Conditional: Adds condition.
- Sans Recourse: Endorser denies liability.
⚠️ Partial endorsement is invalid in law.
5) Exam Pointers
- Bearer → delivery only
- Order → endorsement + delivery
- Forged endorsement → No title passes
- HDC gets better title than transferor
6) Quick MCQ Practice
- Negotiation of bearer instrument is by:
A) Endorsement B) Delivery C) Both D) Assignment
✔ Answer: B
- Which endorsement stops further transfer?
A) Blank B) Restrictive C) Special D) Facultative
✔ Answer: B
7) বাংলা নোট
Negotiation (নেগোশিয়েশন) মানে হলো—একটি চেক/বিল এমনভাবে হস্তান্তর করা যাতে নতুন ব্যক্তি Holder হয়ে টাকার দাবি করতে পারে।
- Bearer → শুধু Delivery
- Order → Endorsement + Delivery
- জাল এন্ডোর্সমেন্টে কোনো অধিকার যায় না
