Tag: meaning and characteristics of negotiable instruments

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Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

An indorsement made by an indorser by signing his name and also by writing the name of the indorse, is known as _________________.

  1. General indorsement

  2. Special indorsement

  3. Restrictive indorsement

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A special indorsement specifies the person to whom or to whose order the instrument is to be payable. It includes the signature of the indorser and the name of the indorsee.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Section $141$ of the N.I. Act, $1881$, dealing with offences by companies exempts.

  1. Nominated directors

  2. Additional directors

  3. Directors nominated by financial institutions

  4. Government nominated directors
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Section 141 of the Negotiable Instruments Act provides specific exemptions for directors nominated by the government, as they are acting in an official capacity rather than as private individuals.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Classification of Negotiable Instruments
An inland instrument is one which is -.
1. Drawn and made payable in India
2. Drawn in India upon some person resident therein, even though it is made payable in a foreign country
Select the correct answer from the options given below-

  1. 2 only

  2. Either 1 or 2

  3. 1 only

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
A promissory note, bill of exchange or cheque drawn or made in India, and made payable in, or drawn upon any person resident, in  India shall be deemed to be an inland instrument.
Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Railway bonds are _______.

  1. Negotiable Instrument

  2. Share Warrants

  3. Dividend Warrants

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Negotiable bonds are bonds issued by the states, municipalities, and other state owned corporations (Public-sector undertakings), which are payable by the bearer. Such bonds are payable by the bearer, whether their interests are attached or detached.

Essentially, it is a signed writing that contains an unconditional promise or order to pay an exact amount of money, either when demanded or at a specific future time.It’s primary function is to substitute for money or extension of credit.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

An instrument which is not an inland instrument, is deemed to be a foreign instrument. It must be drawn ______________.

  1. In India

  2. Outside India

  3. Any where

  4. None
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Under the Negotiable Instruments Act, an instrument that is not inland is considered foreign. An inland instrument is one drawn in India and made payable in India, so a foreign instrument must be drawn outside India.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Which one of the following is not the characteristic of a negotiable instrument?

  1. It must be in writing

  2. It must be freely transferable

  3. It must be registered

  4. It must contain definite amount of money
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Negotiable instruments are characterized by being in writing, freely transferable, and containing a definite amount of money. Registration is not a requirement for an instrument to be considered negotiable.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Classification of Negotiable Instruments
Which of the following is a foreign instrument ?

  1. It is drawn in India and made payable only outside India.

  2. It is drawn in India and made payable outside India and drawn on a person resident outside India.

  3. Both (A) and (B)

  4. Neither (A) nor (B)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The Negotiable Instruments Act, 1881 defines foreign instrument as any such instrument not so drawn, made or made payable in India shall be deemed to be a foreign instrument. 

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

Which is not a characteristics of the negotiable instrument?

  1. The holder of the instrument is presumed to be the owner of the property contained in it

  2. They are non-transferrable

  3. A holder in due course gets the instrument free from all defects of title of any previous holder

  4. The instrument is transferrable till maturity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A key characteristic of negotiable instruments is that they are freely transferable. Therefore, stating they are non-transferable is incorrect.

Multiple choice meaning and characteristics of negotiable instruments the negotiable instruments act, 1881 commerce

A bearer negotiable instrument is payable to ______________.

  1. banker

  2. receiver

  3. holder

  4. none of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A bearer instrument means that any check or draft can be transferred to the holder by delivery without having to be endorsed. Section 8 of N.I.Act 1881 defines 'Holder' as under. “The holder of a promissory note, bill of exchange or cheque means, any person entitled in his own name to the possession thereof and to receive or recover the amount due thereon from the parties thereto."