#1
Which of the following is a characteristic of negotiable instruments?
It must be in writing and signed by the maker or drawer
It cannot be transferred to another person
It is not capable of being sued upon by the holder in case of default
It does not allow the transfer of the underlying legal title
#2
Which of the following is not a requirement for an instrument to be considered negotiable?
It must be payable to order or to bearer
It must be payable on demand or at a fixed future time
It must include an express promise or order to pay a specific amount of money
It must be approved by a government agency
#3
Which statement is true regarding a 'bearer cheque'?
It can only be encashed by the person whose name is written on the cheque
It is always crossed and cannot be encashed directly at the bank counter
It is payable to the person holding the cheque at the time of presentation for payment
It requires a bank account to be encashed
#4
Which of the following is not a party to a 'promissory note'?
#5
The 'payee' in a negotiable instrument is the:
Person who has written the instrument
Bank that is directed to pay the amount
Person to whom the payment is directed
Witness to the signing of the instrument
#6
Which characteristic does not apply to a negotiable instrument?
It must be in writing and signed by the maker
It allows the holder to sue in their own name
It requires a witness to be valid
It can be transferred by delivery or by endorsement and delivery
#7
What does 'endorsement' of a negotiable instrument imply?
The destruction of the instrument
The signing of the instrument by the holder to transfer ownership
A legal action against the defaulter
The process of verifying the authenticity of the instrument
#8
Which of the following instruments is considered a 'negotiable instrument' by custom or usage?
Company shares
Bank fixed deposit receipts
Promissory notes
Credit cards
#9
Under the Negotiable Instruments Act, which party is the 'drawee' in the context of a cheque?
The bank that issued the cheque
The person who writes the cheque
The person to whom the cheque is issued
The witness to the transaction
#10
What is the 'maturity date' of a negotiable instrument?
The date when the instrument was issued
The date when the instrument must be presented for acceptance
The date on which the payment stated on the instrument must be made
The date when the instrument is endorsed to another party
#11
In the case of a 'promissory note', who is the 'maker'?
The bank that issues the note
The person who promises to pay the sum
The person to whom the payment is to be made
The witness to the creation of the note
#12
A 'bill of exchange' can be described as:
An order made by one person to another to pay a sum of money to a third person
A promise made by a bank to pay a sum of money after a fixed period
A receipt acknowledging the receipt of goods
A document stating the terms of a loan
#13
What determines the 'negotiability' of a commercial instrument?
Its ability to be exchanged for goods or services
Its ability to carry the rights to payment unconditionally and to be transferred freely
Its physical appearance and form
The reputation of the issuing entity
#14
The 'holder in due course' under the Negotiable Instruments Act refers to a person who:
Has obtained the instrument by inheritance
Is the original drawer of the instrument
Has obtained the instrument for a value, before its maturity, and without knowledge of any defects
Is a bank officer handling the instrument
#15
What does 'sans recourse' mean on a negotiable instrument?
The holder is responsible for the instrument's default
The endorser does not guarantee payment by subsequent parties
The instrument is payable only in a specific currency
The instrument must be presented for payment in person
#16
Under what condition can a negotiable instrument be 'discharged'?
When it is transferred to a new owner
When the principal debtor becomes bankrupt
When all parties liable on the instrument have been fulfilled their obligations
When the instrument is replaced by another form of payment
#17
What does the term 'noting' refer to in the context of dishonored negotiable instruments?
Rewriting the instrument to correct a mistake
Recording the fact of dishonor by a notary public
Notifying the police about the dishonor
Destroying the instrument to prevent further use
#18
Which of the following actions constitutes 'forgery' in relation to a negotiable instrument?
Signing the instrument on behalf of the maker without authorization
Depositing the instrument into a bank account
Crossing the cheque for account deposit only
Presenting the instrument for payment after its due date