#1
Which of the following is a characteristic of negotiable instruments?
It must be in writing and signed by the maker or drawer
ExplanationWritten and signed by the maker or drawer.
#2
Which of the following is not a requirement for an instrument to be considered negotiable?
It must be approved by a government agency
ExplanationGovernment approval is not required.
#3
Which statement is true regarding a 'bearer cheque'?
It is payable to the person holding the cheque at the time of presentation for payment
ExplanationPayable to holder at presentation.
#4
Which of the following is not a party to a 'promissory note'?
Drawee
ExplanationDrawee is not a party.
#5
The 'payee' in a negotiable instrument is the:
Person to whom the payment is directed
ExplanationRecipient of the payment.
#6
Which characteristic does not apply to a negotiable instrument?
It requires a witness to be valid
ExplanationDoesn't require a witness.
#7
What does 'endorsement' of a negotiable instrument imply?
The signing of the instrument by the holder to transfer ownership
ExplanationSigning to transfer ownership.
#8
Which of the following instruments is considered a 'negotiable instrument' by custom or usage?
Promissory notes
ExplanationPromissory notes by custom or usage.
#9
Under the Negotiable Instruments Act, which party is the 'drawee' in the context of a cheque?
The bank that issued the cheque
ExplanationThe bank issuing the cheque.
#10
What is the 'maturity date' of a negotiable instrument?
The date on which the payment stated on the instrument must be made
ExplanationDate payment must be made.
#11
In the case of a 'promissory note', who is the 'maker'?
The person who promises to pay the sum
ExplanationPerson promising to pay.
#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
ExplanationOrder to pay money to a third person.
#13
What determines the 'negotiability' of a commercial instrument?
Its ability to carry the rights to payment unconditionally and to be transferred freely
ExplanationUnconditional rights to payment and transferability.
#14
The 'holder in due course' under the Negotiable Instruments Act refers to a person who:
Has obtained the instrument for a value, before its maturity, and without knowledge of any defects
ExplanationAcquired the instrument for value before maturity, without defects.
#15
What does 'sans recourse' mean on a negotiable instrument?
The endorser does not guarantee payment by subsequent parties
ExplanationEndorser doesn't guarantee payment by others.
#16
Under what condition can a negotiable instrument be 'discharged'?
When all parties liable on the instrument have been fulfilled their obligations
ExplanationAll parties fulfilled their obligations.
#17
What does the term 'noting' refer to in the context of dishonored negotiable instruments?
Recording the fact of dishonor by a notary public
ExplanationRecording dishonor by a notary.
#18
Which of the following actions constitutes 'forgery' in relation to a negotiable instrument?
Signing the instrument on behalf of the maker without authorization
ExplanationUnauthorized signing for the maker.