Evolution & Revolution of Negotiable Instruments
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Evolution of Payment Systems in India
Characteristics\Features of Negotiable Instrument
Presumption as to negotiable instrument
Rules of estopped applicable to negotiable instruments
Payee in a negotiable instrument
Types of Negotiable Instruments
Section 123-131 & 138
Revolution of Payment Systems in India
Exchange of goods and services is the basis of every business activity. Goods are bought and sold for cash as well as on credit. All these transactions require flow of cash either immediately or after a certain time. In modern business, large number of transactions involving huge sums of money takes place every day. It is quite inconvenient as well as risky for either party to make and receive payments in cash. Therefore, it is a common practice for businessmen to make use of certain documents as means of making payment. Some of these documents are called negotiable instruments.
Evolution of trade and commerce leading to the introduction of negotiable instruments In the primitive economic society each tribe or family produced all that is needed and consumed it. Therefore need of commerce was not required. Commerce began to grow only after the division of labor and consequent development of exchange. These stages of the introduction of commerce are as follows: 1. Nonexistence of commerce- In the early stages of economic life, man produced what he needed and consumed it all by himself. Therefore at that time commerce did not exist as there was no division of labor. 2. Trade in the form of barter- In the second stage, wants of the family increased and many families found that they had some goods in excess and some goods deficient. These families wanted to exchange their surplus goods for those goods which they did not possess. This gave rise to “exchange of goods for goods, i.e., Barter system. Thus this how commerce began. 3. Money as a medium of trade- Later money was created as medium of exchange to remove the limitations of barter. This is the third stage of growth of commerce. Introduction of money led to division of labor and specialization. People began to produce goods for certain local markets. Gradually a separate class of artisans and traders came into existence. The size of the market and the number of commodities exchanged in the market, both increased. 4. Economy and growth of commerce- After the decline of the Guild system (i.e. an association of craftsmen in a particular trade), a new class of people, entrepreneur class, came into existence. This class of people became an intermediary between the producers and consumers. Further, growth of commercial enterprise took place. Production began to be undertaken for the markets extended over the whole country. Division of labor started increasing. Production was divided into several branches and each branch was localized. Various economic activities were divided into distinct groups: •
5. World economy and the world market- Later various nations of the world formed commercial relationships due to trade. As a result of the geographical discoveries of the late 15th, 16th and 17th century new trade routes were opened up and commerce grew between nations. This led to the next stage of growth of commerce. Now, commodities were sold and purchased between traders from different countries in the world. This gave rise to an international world market...
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