Negotiable Instruments Act, 1881: types, negotiation, dishonour, discharge - One Line Questions

1. The time allowed for giving notice of dishonour is: — A reasonable time
2. What is the primary difference between a Bill of Exchange and a Cheque? — A Cheque is a type of Bill of Exchange, but a Bill of Exchange is not necessarily a Cheque.
3. Which of the following is an example of a 'crossed cheque'? — A cheque with two parallel transverse lines drawn across its face.
4. What is 'Protest' in the context of dishonour of a negotiable instrument? — A formal declaration by a notary public that the instrument has been dishonoured.
5. A cheque is a bill of exchange drawn on: — A banker and payable on demand
6. The concept of 'Holder' in the Negotiable Instruments Act, 1881 refers to: — A person entitled in his own name to the possession of the instrument and to receive or recover the amount due thereon.
7. Protest is generally required for dishonour of: — Bills of Exchange (foreign and inland, if required)
8. Negotiation of a promissory note or bill of exchange can be done by: — All of the above.
9. The act of transferring a negotiable instrument from one person to another is called: — Negotiation
10. Crossing a cheque is a protection against: — Theft or loss of the cheque
11. In a Bill of Exchange, who is the person who makes the order to pay? — Drawer
12. In a Bill of Exchange, who is the person directed to pay? — Drawee
13. Which of the following is a mode of discharging liability on a negotiable instrument? — Payment
14. A 'Holder in Due Course' is a person who acquires a negotiable instrument: — For good consideration, before the amount is due, and without notice of any defect.
15. Which Act governs negotiable instruments in India? — Negotiable Instruments Act, 1881
16. What does 'Payable on Demand' mean for a negotiable instrument? — It is payable immediately upon presentation.
17. What is the effect of an unqualified endorsement? — It makes the endorser liable.
18. What is the primary characteristic of a negotiable instrument? — It is transferable by endorsement or delivery, conferring a good title to the holder.
19. Which of the following is a requirement for an instrument to be a valid Promissory Note? — It must contain an unconditional undertaking to pay a certain sum of money.
20. When the Drawee of a Bill of Exchange signs it in token of assent to the order of the Drawer, he is called the: — Acceptor
21. A 'Restrictive Endorsement' makes the instrument: — Non-negotiable.
22. When a negotiable instrument is paid by the principal debtor in due course, it is: — Discharged
23. Dishonour of a bill of exchange can occur by: — Both non-acceptance and non-payment
24. Dishonour of a cheque can occur by: — Non-payment
25. A 'Bill of Exchange' is a written order made by: — One party to another to pay a specified sum of money to a third party.
26. A 'Promissory Note' is a written promise made by: — One party to another to pay a specified sum of money.
27. Release of the principal debtor by the holder discharges: — Only the endorsers.
28. Endorsement in full requires: — The signature of the endorser and the name of the endorsee.
29. In a Promissory Note, who is the person who makes the promise to pay? — Maker
30. A negotiable instrument is discharged by: — Payment by the maker, acceptor, or drawee in due course.
31. A 'Drawer' in a bill of exchange is liable: — Secondarily, if the drawee fails to accept or pay.
32. The liability of the drawer of a bill of exchange is: — Secondary and conditional.
33. Which of the following is NOT a type of negotiable instrument recognized under the Act? — Share Certificate
34. A 'Cheque' is a specific type of: — Bill of Exchange
35. The liability of the acceptor of a bill of exchange is: — Primary and absolute.
36. The liability of the maker of a promissory note is: — Primary and absolute.
37. Which section of the Negotiable Instruments Act, 1881 defines 'Promissory Note'? — Section 4
38. Which section of the Negotiable Instruments Act, 1881 defines 'Bill of Exchange'? — Section 5
39. Which section of the Negotiable Instruments Act, 1881 defines 'Cheque'? — Section 6
40. A 'Holder in Due Course' has the right to receive payment: — Free from all equities to which the maker was subject.
41. Notice of dishonour must be given within a reasonable time after dishonour, and must be given to: — The drawer and endorsers who may be liable.
42. What is the consequence of dishonour by non-acceptance of a bill of exchange? — The bill is immediately due for payment.
43. For dishonour of a negotiable instrument, the holder must give notice of dishonour to: — The drawer and endorsers who are liable.
44. Who is primarily liable on a cheque? — The drawer
45. What is the consequence of dishonour by non-payment of a bill of exchange or cheque? — The holder can sue the drawer and endorsers.
46. Dishonour of a negotiable instrument means: — The instrument has not been paid or accepted as per its terms.
47. Discharge of a negotiable instrument means: — The liability of all parties on the instrument ceases.
48. When a negotiable instrument is endorsed in blank, it becomes payable to: — The holder of the instrument.
49. When is a negotiable instrument discharged by cancellation? — When the holder intentionally cancels the signature of any party liable.
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