Negotiable Instruments Act Multiple Choice Questions
1. _______ means ‘something legally transferable from one person to another for a consideration’.
a. Instrument
b. Negotiable
c. Negotiable Instruments
d. all of the above
Ans. b
2. ______ means ‘ a written document by which some legal rights are created in favor of some person’
a. Instrument
b. Negotiable
c. Negotiable Instruments
d. all of the above
Ans. a
3. Negotiable instrument means a promissory note, bill of exchange or cheque, payable to ___________
a. Bearer
b. order
c. either to bearer or order
d. neither bearer nor order
Ans. c
4. A negotiable instrument is freely transferable, by delivery if it is a/an ______________ instrument.
a. order
b. bearer
c. both a & B
d. None of the above
Ans. b
5. A negotiable instrument is freely transferable, by endorsement if it is a/an ____________ instrument.
a. order
b. bearer
c. both a & b
d. None of the above
Ans. a
6. The transferee of a negotiable instrument is the one
a. who transfer the instrument
b. on whose name it is transferred
c. who en chases it
d. none of the above
Ans. b
7. The transferor of a negotiable instrument is the one
a. who transfer the instrument
b. on whose name it is transferred
c. who en chases it
d. none of the above
Ans. a
8. The instrument must be taken in good faith and with a
a. Interest
b. consideration
c. legal relation
d. business motive
Ans. b
9. when an instrument has been lost it is presumed that it was ____________
a. expired
b. duly stamped
c. stolen
d. misplaced
Ans. b
10. which of the below given sentence is proper as to considered to be written in negotiable instruments
a. I promise to pay B rs.500
b. Mr. B I.O (owe).U Rs.1000.
c. I am liable to pay you Rs.1000.
d. none of the above.
Ans. d
11. _________ an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. a
12. ______________ is an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person, to a pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. b
13. The number of parties to a bill of exchange is _______
a. 2
b. 4
c. 6
d. 3
Ans. d
14. The number of parties to a Promissory Note is _______
a. 2
b. 4
c. 6
d. 3
Ans. a
15. Sec 4 of negotiable instruments Act 1880 deals with
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. a
16. Sec 5 of negotiable instruments Act 1880 deals with
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. b
17. Sec 6 of negotiable instruments Act 1880 deals with
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. c
18. The parties of a bill of exchange are
a. drawe acceptor and payee
b. banker drawee and payee
c. banker acceptor and payee
d. banker drawer and payee
Ans. a
19. __________________ cannot be a bearer instrument
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. a
20. Acceptance is _________________ in case of bill of exchange
a. compulsory
b. optional
c. not compulsory
d. adequate
Ans. a
21. Acceptance is _________________ in case of bill of exchange
a. compulsory
b. optional
c. not compulsory
d. not necessary
Ans. d
22. Drawer is both debtor to one and creditor to another in case of ________________
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. b
23. Liability of maker is __________ in case of bill of exchange
a. primary
b. unlimited
c. unconditional
d. secondary
Ans. d
24. ___________ is an order to pay the third party
a. Promissory Note
b. bill of exchange
c. Cheque
d. none of the above
Ans. a
25. A Promissory Note or Bill of Exchange can be made payable
a. On demand
b. On a specific date
c. After a specified period – months or days.
d. all of the above
Ans. d
26. To calculate the maturity date of a negotiable instrument the drawing date to be ___for counting
a. included
b. considered
c. excluded
d. non of the above
Ans. c
27. If the instrument is not ‘on demand’ ___________ days of grace is granted.
a. 7
b. 5
c. 3
d. 4
Ans. c
28. when the is crossed with Two parallel lines or with word ‘& Co.’ etc. this crossing is known as
a. general crossing
b. special crossing
c. restrictive crossing
d. none of the above
Ans. a
29. when the is crossed with Two parallel lines or with ‘A/c payee only.’ etc. this crossing is known as
a. general crossing
b. special crossing
c. restrictive crossing
d. none of the above
Ans. c
30. In the case of Bill of Exchange drawee is the ____________.
a. maker
b. acceptor
c. payee
d. none of the above
Ans. b
31. When the loss of cheque is intimated to the bank. It is advisable to get the cheque
a. dishonored
b. cancelled
c. stalled
d. countermanded
Ans. d
32. When bank has reason to believe that the title of the presenter is defective , then the cheque will be
a. dishonored
b. cancelled
c. stalled
d. countermanded
Ans. a
33. A holder in due course will get protected from earlier defect of
a. no consideration
b. conditional delivery
c. unlawful means
d. all of the above
Ans. d
34. _____of an instrument means a person legally entitled to possess and receive in his own name
a. owner
b. maker
c. holder
d. receiver
Ans. c
35. Holder of an instrument is a person who holds the instrument
a. for a longer period
b. before maturity
c. after maturity
d. on behalf of the owner
Ans. b
36. Countermanding of a cheque is also known as
a. cancellation
b. dishonor
c. stop payment
d. payment through counter
Ans. c
37. ‘Something legally transferable from one person to another for a consideration’ is known as
a. Endorsement
b. bill of exchange
c. promissory note
d. negotiation
Ans. d
38. ‘ A written document by which some legal rights are created in favour of some person’
a. Endorsement
b. Instrument
c. promissory note
d. negotiation
Ans. b