Negotiable Instruments Act 1881

Topics: Credit card, Negotiable instrument, Cheque Pages: 23 (8307 words) Published: March 4, 2010
Table of Contents
EVOLUTION OF TRADE AND COMMERCE LEADING TO THE INTRODUCTION OF NEGOTIABLE INSTRUMENTS. The world as a whole has been the “cradle of commerce” because this exchange is not only between individuals but also between peoples and nations. This naturally implies the existence of: CERTAIN SURPLUS OF WEALTH

Both of which are essential for growth of commerce. Unless there is a surplus of wealth and provision for communication, commerce cannot grow. EXAMPLE- In the primitive economic society when each tribe or family produced all that is needed and consumed all that it produced, need of commerce did not and could not arise. Only after the division of labour and consequent development of exchange, commerce began to grow. Once it started growing, it spread its invisible thread throughout the length and breadth of the world leading to its present day complex mechanism. These stages may be summarized as follows: TRADE IN THE FORM OF BARTER- In the second stage, wants of the family became more numerous and many families found themselves with certain goods and surplus and deficient in certain other goods. 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 is the place from where commerce may be said to have begun. MONEY AS A MEDIUM OF TRADE AND TOWN AS THE CENTRE OF TRADE- Commerce reached into its third stage of growth when money was evolved as medium of exchange to remove the limitations of barter. Introduction of money began led to the extension of division of labour and specialization. People began to produce goods for certain local markets. Thus, division of labour was extended to a locality. Gradually a separate class of artisans and traders came into existence. They settled down at fixed places which came to be known as towns. Growth of these towns gave great stimulus to commerce. The size of the market and the number of commodities exchanged in the market, both increased. Traders from other countries brought luxury articles, metals and ornaments for sale. {text:list-item} {text:list-item} {text:list-item}

WORLD ECONOMY AND THE WORLD MARKET- Commerce entered into another stage of its growth when nations of the world were brought into commercial relationships through the invisible thread of trade. As a result of the geographical discoveries of the late 15th, 16th and 17th centuries new trade routes were opened up and commerce grew between nations. Now, in addition to the local market and the trade extending over the whole area of a single country, commodities came to be sold and purchased between traders from different countries in the world. This gave rise to an international world market and to the international trade. Thus the nations of the world were linked together through the medium of the world market. Evolution of commerce is a never ending process. Almost every day new experiments in its mechanism are made. New forms and methods are being evolved in both socialist and capitalist countries, in both developed and developing nations. WHY WAS IT NECESARRY TO INTRODUCE NEGOTIABLE INSTRUMENTS? Historically business developed by stages.

Pastoral stage
Agricultural stage
Handicrafts stage
Guild stage
Domestic stage
Factory stage.
Agricultural stage: In course of time, the nomadic tribes settled permanently at fixed places, built up the huts and shelters for their residences and began cultivating the land in common. Growing corns, grasses etc. became the main occupation. Agriculture emerged as the basic feature of economic living of man. He gradually produced more and then started to exchange it with other commodities. This was...
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