Short Notes for DAIBB-Management of Financial Institution: Payment in Due Course

Payment in due course means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances, which do not afford a reasonable ground for believing that he is not entitled to receive the amount therein mentioned. A paying banker does not get statutory protection under NI Acts if he does not make the payment of negotiable instrument in due course. According to above, the following four conditions to be satisfied to treat the payment as a payment in due course. 

i.                    Payment must be in accordance with the apparent tenor of the instrument.

ii.                  Payment made must be to a legally entitled person in good faith and without negligence

iii.                Payment must be made only against the presentation of the instrument for payment.

iv.                 The person to whom payment is made should be in possession of the instrument and should also be entitled to receive payment on it.