The term “NIs” is an abbreviation for “negotiable instruments,” which include promissory notes, bills of exchange, and cheques. The capacity of parties to NIs refers to their legal ability or authority to enter into a transaction involving a negotiable instrument.
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The capacity of the Drawer: The drawer must have the legal capacity to enter into a contract, which means they must be of legal age and have the mental capacity to understand the terms of the instrument.
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The capacity of the Payee: The payee can be any person or entity, as long as they are capable of entering into a legal transaction. For example, a minor or someone with mental incapacity may not have the capacity to be a payee.
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The capacity of the Drawee: The drawee must also have the legal capacity to enter into a contract, and must be capable of paying the amount specified on the instrument.
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The capacity of the Endorser: If the instrument is endorsed, the endorser must have the legal capacity to enter into a contract, and must be authorized to endorse the instrument.
It’s important to note that the capacity of parties to NIs can vary depending on the applicable laws and regulations. If you have any questions or concerns about the capacity of a party to a negotiable instrument, it’s advisable to seek the advice of a legal professional.
