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Aishath Muneeza, Ismail Wisham, Rusni Hassan,
International Islamic University Malaysia
As regards to the additional amount of interest at a given
rate in a bill of exchange or promissory note, the sum
payable with interest was considered 'CERTAIN' within the
meaning section 5 and 4 of the Negotiable Instruments Act
1881. Now with the abolition of 'interest' and its replacement
with the words 'or return in any other form' which may
comprise of a share in profit or loss (an unknown sum),
mark-up in price in a deferred-payment sale and rental in
lease or hire-purchase. This additional 'return' may not be
capable of being described with the same certainty, as was
'interest' at a given rate per annum.
Whether a bill of exchange or a promissory note could
remain a valid financial instrument within the meaning of
the Negotiable Instruments Act 1881 if it was payable with
'return' the amount or rate of which could not be specified in
the manner of rate of interest per annum. To overcome this
problem a new paragraph has been added after the third
paragraph in section 5 of the Negotiable Instruments Act
1881 which reads as under:
"A promise or order to pay is not conditional nor is the sum
payable 'uncertain' within the meaning of this section or
section 4 by reason of the sum payable being subject to
adjustment for profit or loss, as the case may be of the
business of the maker."
Section 79 and 80 of the Negotiable Instruments Act 1881
dealt with the relief of debtors in the context of payment of
interest expressly made payable at a specified rate without
mentioning dates or when the promissory note or bill of
exchange were silent as regards to interest or its rate. With
the introduction of interest free banking addition has been
made through a legal amendment in section 79 and 80 of the
ii) it must contain an order to pay on demand or at a deter minable
future time.
iii) Order contained in the bill must be unconditional
iv) the person directed to pay must be certain
v) the sum payable must be certain
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