Negotiable Instruments: What is Negotiation and Assignment?
Mon, 05/17/2010 - 16:33 — LIG Reporter
Section 14 of the Negotiable Instruments Act defines negotiation as, “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.” The holder of the instrument also gets the right to recover the amount mentioned on it. Negotiation may be carried out by delivery or delivery and endorsement. On the other hand, an assignment can be defined as, when the possession of a negotiable instrument is transferred by writing a discrete deed of transfer.
Negotiable Instruments Act: Distinction between Negotiation and Assignment
The following table illustrates major differences between negotiation and assignment:
| Negotiation | Assignment |
| Negotiation can be done either by delivery or by delivery and endorsement. | Written document duly signed by the transferor is mandatory for an assignment. |
| The consideration in case of negotiation is presumed. | The consideration has to be proved in case of an assignment. |
| A notice of transfer to the creditor is not mandatory. | Informing the creditor about the assignment is mandatory. |
| The Act governing negotiation of negotiable instruments is the Negotiable Instruments Act, 1881 | The activities concerning an assignment are regulated by the Transfer of Property Act, 1882 |
Final Legal Take Away Tip: In case of negotiation, the transferee enjoys a better title than that of the transferor. However, in case of an assignment, the assignee and the assignor enjoy equal title.
Comments
In what other ways government can make our life more worth not living?
Please list the taxes that one pays since birth till death.
Wife serves a glass of water thus providing service. Why should government not tax it?
Thanks, Anil, we know exactly what you mean. Our purpose is to educate people about relevant laws and we hope this article is beneficial in addressing that goal. We'd love to know your thoughts and comments on other articles too.
Post new comment