12th Commerce - The Negotiable Instruments Act, 1881 Book Back Questions | QB365

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12th Commerce - The Negotiable Instruments Act, 1881 Book Back Questions

Published on: 10/09/2019

The Negotiable Instruments Act, 1881

Download Tamil Nadu 12th Standard Commerce question papers, model tests, one-mark questions, important questions, and public exam papers in PDF format. Free study materials and answer keys for TN State Board students.

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Questions:

Multiple Choice Question

5 x 1 = 5

Document of title to the goods exclude ______________

(a)

Lorry receipt

(b)

Railway receipt

(c)

Airway bill

(d)

Invoice

A cheque will become stale after _______ months of its date:

(a)

(b)

(c)

(d)

Which endorsement relieves the endorser from incurring liability in the event of dishonour

(a)

Restrictive

(b)

Faculative

(c)

Sans recourse

(d)

Conditional

________cannot be a bearer instrument.

(a)

Cheque

(b)

Promissory Note

(c)

Bills of exchange

(d)

None of the above

Section 6 of Negotiable Instruments Act 1881 deals with _______.

(a)

Promissory Note

(b)

Bills of exchange

(c)

Cheque

(d)

None of the above

Generic 2

3 x 2 = 6

Define Endorsement

What is a meant by Cheque?

List three characteristics of a Promissory Note.

Generic 3

3 x 3 = 9

Draw the two different types of crossing.

10.

What are the characteristics of a bill of exchange?

11.

Distinguish between Negotiability and Assignability.

Generic 5

2 x 5 = 10

12.

Distinguish a cheque and a bill of exchange.(any 5)

13.

Mention the presumptions of Negotiable Instruments.

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Answers Key:

Multiple Choice Question

5 x 1 = 5

(d)
Invoice

(a)
3

(b)
Promissory Note

Generic 2

3 x 2 = 6

When the maker or holder of a negotiable instrument signs the name, otherwise that as such maker for the purpose of negotiation, on the back or face thereof, or on a slip of paper annexed there to or so signs for the same purpose a stamped paper intended to be completed as a negotiable instrument, he is said to endorse the same and is called the endorsee.

According to section 6 of the Negotiable Instruments Act, 1881 defines a cheque as "a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand"

Characteristics of a promissory note:
(i) A promissory note must be in writing.
(ii) The promise to pay must be unconditional.
(iii) It must be signed by the maker.

Generic 3

3 x 3 = 9

Crossing is of two types: General crossing and special crossing
General Crossing:
1. It is according to section 123 of the Negotiable Instruments Act, 1881.
2. "Where a cheque bears across its face with 'and company" or any abbreviation between two parallel transverse lines with or without the words 'not negotiable, the cheque shall be deemed to be crossed generally':
Special Crossing:
1. It is according to section 124 of the Negotiable Instruments Act, 1881.
2. "Where a cheque bears across its face an addition of the name of a banker with or without the words 'not negotiable, the cheque shall be deemed to be crossed specially and to be crossed to the bankers".

10.

Characteristics of a bill of exchange
(i) A bill of exchange is a document in writing.
(ii) The document must contain an order to pay.
(iii) The order must be unconditional.
(iv) The instrument must be signed by the person who draws it.
(v) The name of the person on whom the bill is drawn must be specified in the bill itself.
(vi) The amount that isrequired to be paid must also be specified in the bill.

11.

SI.No	Basis of Difference	Negotiability	Assignability
1.	Legal ownership	It passes to the transferee by mere endorsement in the case of a bearer instrument and by endorsement and delivert in the case of an order instrument.	An assignment can be made by observing certain formalities. For instance, an instrument is to be made in writing, duly stamped and igned by the transferor or his agent.
2.	Notice	Notice is not necessary for the holder of negotiable instrument to claim the payment from the debtor.	In case of actionable claim, notice of the assignment by the transferee regarding the transfer of debt to the debtor is necessary.
3.	Nature of title	Holder of negotiable instrument in due course gets a better title than even the transferor.	The transferee's title to the instrument is subject to the defects of the transferor's title.
4.	Consideration	Consideration is presumed	The assignee has to prove the consideration for the transfer.

Generic 5

2 x 5 = 10

12.

SI.No	Basis of Difference	Cheque	Bill of Exchange
1.	Drawn	A cheque can be drawn only on a particular banker.	A bill of exchange can be drawn on any person including a banker
2.	Payability	It is payable on demand only.	It is payable on demand or on the expiry of a certain period.
3.	Validity	A cheque drawn payable to bearer on \|demand is perfectly valid.	A bill made payable to bearer on demand is void by virtue of section 31 of the RBI Act.
4.	Acceptance	A cheque does not require any acceptance.	In case of time bill, acceptance by the drawee is necessary before he can be made liable on it.
5.	Grace Period	No days of grace are allowed in the case of a cheque for the simple reason that is always payableon demand.	Three days of grace are allowed while calculating the maturity date in the case of time bill.
6.	Notice	Notice is not necessary for a cheque.	When a bill is dishonoured, notice of dishonour is necessary.

13.

Certain presumptions as briefly mentioned below:
(i) Every negotiable instrument is presumed to have been drawn, accepted, etc. for consideration.
(ii) A negotiable instrument is presumed to have been accepted.
(iii) Every negotiable instrument bearing, a date is presumed to have been made or drawn on such a date.
(iv) It is presumed to have been accepted within a reasonable time after the date and before its maturity.
(v) The transfer of a negotiable instrument is presumed to have been made before maturity.
(vi) The endorsements appearing upon a negotiable instrument are presumed to have been made in the order to which they appear thereon.
When a negotiable instrument has been lost, it is presumed to have been duly stamped.
(vi) The holder of a negotiable instrument is presumed to be a holder in due course.