Tag: commerce

Questions Related to commerce

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

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

  1. Nominated directors

  2. Additional directors

  3. Directors nominated by financial institutions

  4. Government nominated directors

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Correct Option: D

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-

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

  1. 2 only

  2. Either 1 or 2

  3. 1 only

  4. None of the above

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Correct Option: B
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.

Railway bonds are _______.

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

  1. Negotiable Instrument

  2. Share Warrants

  3. Dividend Warrants

  4. None of the above

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Correct Option: A
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.

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

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

  1. In India

  2. Outside India

  3. Any where

  4. None

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Correct Option: B

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

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

  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

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Correct Option: C

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

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

  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)

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Correct Option: D
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. 

Which is not a characteristics of the negotiable instrument?

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

  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

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Correct Option: B

The Indian Negotiable Instrument Act was formed in the year_______.

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

  1. $1818$

  2. $1918$

  3. $1881$

  4. $1981$

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Correct Option: A
Explanation:

The Indian Negotiable Instrument Act was formed in the year 1881.

A bearer negotiable instrument is payable to ______________.

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

  1. banker

  2. receiver

  3. holder

  4. none of the above.

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Correct Option: C
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."

Characteristics of Negotiable Instruments
Which of the following can be considered as characteristic/s of negotiable instruments?
A. The holder in due course is entitled to sue on the instrument in his own name.
B. The instrument is transferable till maturity and in case of cheques, till it becomes stale.
Select the correct answer from the options given below-

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

  1. A only

  2. B only

  3. Both A & B

  4. None of above

Show answer
Correct Option: C
Explanation:
Important characteristics of Negotiable Instruments are:
  • Negotiable instrument does not simply give ownership of the instrument but right to property as well. The property in negotiable instrument can be moved without any formality. In the case of bearer instrument, the possessions pass by meager delivery to the transferee. In case of order instrument, endorsement & delivery are necessary for transfer of property.
  • The transferee of negotiable instrument is called ‘holder in due course.’ A genuine transferee for value is not affected by any flaw of title on the part of transferor or of any of the previous holders of instrument.
  • The transferee of negotiable instrument can take legal action in his own name, in case of dishonour. A negotiable instrument can be reassigned any number of times till it is attains maturity. The holder of instrument need not give notice of transfer to the party legally responsible on the instrument to pay.
  • Certain presumptions are applicable to all negotiable instruments. It is not essential to write in promissory note the words ‘for value received’ or alike expressions for the reason that the payment of consideration is acknowledged. The words are typically included to generate additional substantiation of consideration.
  • A negotiable instrument facilitates the holder to anticipate prompt payment because dishonour refers to the ruin of credit of all persons who are parties to the instrument.