Chapter IV - Of Negotiation
Section 47
Section 47: Negotiation of bearer instruments by delivery
Section 47 permits negotiation of a bearer instrument by delivery, subject to the unlawful-title provision and a specific conditional-delivery exception.
On this page
Need advice on Section 47?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Subject to the provisions of section 58, a promissory note, bill of exchange or cheque payable to bearer is negotiable by delivery thereof.
Exception.—A promissory note, bill of exchange or cheque delivered on condition that it is not to take effect except in a certain event is not negotiable (except in the hands of a holder for value without notice of the condition) unless such event happens.
Illustrations: (a) A, the holder of a negotiable instrument payable to bearer, delivers it to B's agent to keep for B. The instrument has been negotiated.
(b) A, the holder of a negotiable instrument payable to bearer, which is in the hands of A's banker, who is at the time the banker of B, directs the banker to transfer the instrument to B's credit in the banker's account with B. The banker does so, and accordingly now possesses the instrument as B's agent. The instrument has been negotiated, and B has become the holder of it.
Key rule and applicability
Delivery is the transfer method for the stated bearer note, bill or cheque. Where delivery is conditional on a certain event before the instrument takes effect, the exception restricts negotiation until that event, while preserving the stated holder-for-value-without-notice position.
Limits and related provisions
Physical transfer does not erase section 58’s title restrictions. Also distinguish this exception’s holder for value without notice of the condition from other statutory tests rather than replacing its wording with a different label.
Hypothetical business example
Hypothetical: a bearer instrument is delivered on an express condition tied to an event. A recipient assesses whether that event occurred and whether the particular protected-holder exception applies before asserting that delivery alone resolves the claim.
Practical decision flow
Confirm bearer status and actual or legally effective delivery.
Identify any event condition and the recipient’s notice and value position.
Check section 58 and retain the instrument and transfer records.
Practical checklist
Do
- Confirm bearer status and actual or legally effective delivery.
- Identify any event condition and the recipient’s notice and value position.
- Check section 58 and retain the instrument and transfer records.
Avoid
- Physical transfer does not erase section 58’s title restrictions. Also distinguish this exception’s holder for value without notice of the condition from other statutory tests rather than replacing its wording with a different label.
Glossary
- Delivery
- The transfer mechanism described for bearer instruments.
- Conditional delivery
- Delivery under which the instrument takes effect only on the specified event.
Frequently asked questions
Does the section permit negotiation by delivery alone for bearer instruments?
Yes, subject to its exception and section 58.
Does a stated event condition always disappear on transfer?
No. The statutory conditional-delivery exception must be applied.
What protected position is expressly mentioned in that exception?
A holder for value without notice of the condition.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026