Quiz on Negotiable Instruments and Bank Guarantees

Which of the following is NOT an essential characteristic of a promissory note?

• It must be in writing

• It must contain an unconditional promise to pay

• It must be drawn on a banker

• It must be signed by the maker

As per the Negotiable Instruments Act, a bill of exchange must contain:

• An unconditional order to pay

• A promise to pay a specific sum

• A requirement for prior acceptance by the payee

• A clause specifying that it is non-transferable

Which of the following is NOT a distinction between a cheque and a bill of exchange?

• A cheque is always drawn on a banker

• A cheque does not require acceptance

• A cheque is always payable on demand

• A bill of exchange can never be endorsed

What is the purpose of crossing a cheque?

• To ensure it is not transferable

• To instruct the banker to pay only through a bank account

• To increase the validity period of the cheque

• To convert a cheque into a promissory note

How many parties are involved in a bill of exchange?

• Two

• Three

• Four

• One

Under which section of the Negotiable Instruments Act is a promissory note defined?

• Section 2

• Section 3

• Section 4

• Section 5

What protection does the law provide to a paying banker?

• The banker is always liable for dishonoring cheques

• The banker is protected if the payment is made in due course

• The banker can refuse to pay any cheque without reason

• The banker is not responsible for verifying signatures

A post-dated cheque is:

• Invalid and cannot be legally enforced

• A cheque that can be cashed before the date written on it

• A cheque that is valid but payable only on the future date mentioned

• A type of promissory note

What is meant by 'payment in due course' under the Negotiable Instruments Act?

• Payment made after the due date

• Payment made in accordance with the apparent tenor of the instrument

• Payment made only after legal approval

• Payment made without verifying the payee

How long is the validity of a cheque from the date of issue?

• 1 month

• 3 months

• 6 months

• 12 months