Multiple choice

A negotiable instrument has which of the following combinations of characteristics?

  1. It is transferable by delivery and endorsement only.

  2. It can be a crossed instrument or an uncrossed instrument.

  3. It is freely transferable and the transferee gets defect free right.

  4. There is no restriction on transfers due to which it is called negotiable.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The conditions of negotiability are (i) The instrument should be freely transferable. An instrument cannot be negotiable unless it is such and in such state that the true owner could transfer by simple delivery or endorsement and delivery. (ii) The person who takes it for value and in good faith is not affected by the defect in the title of the transferor. (iii) Such a person can sue upon the instrument in his own name.

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