Quiz on Negotiable Instruments

What is the key characteristic of a promissory note?

• Conditional promise to pay

• Unconditional undertaking to pay

• Contains signatures of two witnesses

• Payable only in foreign currency

A valid promissory note must be:

• Oral or written

• In writing only

• Accompanied by a guarantee

• Signed by both parties

Which of these examples qualifies as a valid promissory note?

• 'I owe you Rs. 1000.'

• 'I promise to pay Mr. X Rs. 500 on D's death.'

• 'I promise to pay B or order Rs. 1000.'

• 'I promise to pay Rs. 500 whenever convenient.'

A bill of exchange requires how many parties?

• Two

• Three

• Four

• Any number

The person who accepts the bill of exchange is known as the:

• Drawer

• Drawee

• Endorser

• Payee

True or False: A bill of exchange can be oral.

• True

• False

What distinguishes a bill of exchange from a promissory note?

• Bills contain orders, promissory notes contain undertakings.

• Bills are signed by two parties, promissory notes require three.

• Bills can only be used for foreign trade.

• Bills are always payable to the bearer.

A cheque is:

• A type of promissory note

• A bill of exchange drawn on a bank

• Always payable in installments

• Issued by the Central Government only

Crossing of a cheque restricts:

• The bank's ability to process the cheque

• The negotiability of the cheque

• The payment timeline

• All of the above

True or False: A post-dated cheque is invalid.

• True

• False