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The Negotiable Instrument, 1881 MCQs SET-3
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1. Section 52 of the Negotiable Instruments Act deals with:
a. Conditional delivery
b. Holder in due course
c. Indorser excluding his liability or making it conditional
d. Negotiation by delivery
2. An indorser may exclude his liability on a negotiable instrument by:
a. Express words in the indorsement
b. Oral statement
c. Bank notice
d. Court order
3. An indorser may make his liability depend upon:
a. Bank verification
b. Drawer’s consent
c. A specified event
d. Court approval
4. The specified event upon which liability depends:
a. Must certainly happen
b. Must happen within 30 days
c. Must be approved by bank
d. May or may not happen
5. When the liability of the indorser is excluded:
a. He remains fully liable
b. He is not liable on the instrument
c. Bank becomes liable
d. Drawer becomes liable
6. The right of the indorsee to receive payment may depend upon:
a. Government approval
b. Acceptance by bank
c. Registration of instrument
d. A specified event mentioned in the indorsement
7. If the indorser who excluded his liability later becomes the holder:
a. He cannot recover from anyone
b. Intermediate indorsers become liable to him
c. The instrument becomes void
d. The drawer alone is liable
8. Intermediate indorsers refer to:
a. Only the first indorser
b. Only the last indorser
c. Bank officials
d. Indorsers between the first indorsement and the present holder
9. The exclusion of liability must be made:
a. Verbally
b. By court declaration
c. By bank entry
d. By express words in the indorsement
10. Section 53 of the Negotiable Instruments Act deals with:
a. Rights of holder deriving title from holder in due course
b. Negotiation by delivery
c. Liability of drawer
d. Forgery
11. A holder deriving title from a holder in due course:
a. Has no rights
b. Has the same rights as the holder in due course
c. Has limited rights
d. Must file suit first
12. The rights obtained by such holder arise because:
a. He purchased instrument
b. He derived title through holder in due course
c. He endorsed instrument
d. Court granted permission
13. Section 53 protects:
a. Every holder
b. Holder deriving title through holder in due course
c. Drawer only
d. Drawee only
14. The rights under Section 53 apply to:
a. Negotiable instruments only
b. Currency notes
c. Bonds
d. Cheques only
15. The principle behind Section 53 is:
a. Agency
b. Transfer of rights through holder in due course
c. Suretyship
d. Payment
16. The rights available to such holder are:
a. Independent rights
b. Same rights as transferor if transferor is holder in due course
c. Bank rights
d. Court rights
17. The person from whom title is derived must be:
a. Drawer
b. Payee
c. Holder in due course
d. Banker
18. Section 53 strengthens protection of:
a. Fraudulent holders
b. Good faith holders
c. Bank officials
d. Government officers
19. The concept under Section 53 is closely related to:
a. Holder in due course doctrine
b. Negotiation by delivery
c. Acceptance
d. Indorsement in blank
20. Section 54 of the Negotiable Instruments Act deals with:
a. Conditional indorsement
b. Negotiation by delivery
c. Instrument indorsed in blank
d. Holder in due course
21. A negotiable instrument indorsed in blank becomes:
a. Payable to order
b. Payable to bearer
c. Payable to bank
d. Payable to drawer
22. This rule applies even if the instrument was originally:
a. Payable to bank
b. Payable to government
c. Payable to drawee
d. Payable to order
23. Section 54 operates subject to provisions regarding:
a. Promissory notes
b. Crossed cheques
c. Agency
d. Dishonour
24. Indorsement in blank converts the instrument into:
a. Order instrument
b. Bearer instrument
c. Conditional instrument
d. Non-negotiable instrument
25. The bearer of such instrument becomes:
a. Holder
b. Drawee
c. Drawer
d. Acceptor
26. Negotiation of such instrument can occur by:
a. Bank confirmation
b. Registration
c. Court approval
d. Delivery
27. Indorsement in blank means:
a. Signature only without specifying payee
b. Signature with condition
c. Signature with bank seal
d. Signature with court stamp
28. Once indorsed in blank, the instrument functions as:
a. Non-transferable
b. Bearer instrument
c. Bank instrument
d. Government security
29. Section 55 of the Negotiable Instruments Act deals with:
a. Effect of converting blank indorsement into full indorsement
b. Forgery
c. Holder rights
d. Payment
30. When an instrument indorsed in blank is later indorsed in full:
a. Liability disappears
b. Amount can be claimed from indorser in full by specified person only
c. Instrument becomes void
d. Bank becomes liable
31. The indorser in full becomes liable to:
a. Anyone
b. Bank
c. Person to whom instrument is indorsed in full
d. Drawer only
32. A person deriving title through the specified indorsee:
a. Can claim amount
b. Cannot claim amount
c. Must file suit
d. Must obtain bank approval
33. The restriction created by Section 55 applies against:
a. Indorser in full
b. Drawer
c. Bank
d. Payee
34. Indorsement in full means:
a. Only signature
b. Signature plus direction to pay specified person
c. Bank stamp
d. Court seal
35. After conversion, the instrument becomes payable:
a. To bearer
b. To Bank
c. To specified indorsee
d. To government
36. Section 55 limits claim against:
a. Maker
b. Drawee
c. Indorser in full
d. Holder
37. The rule ensures:
a. Controlled negotiation
b. Unlimited transfer
c. Bank control
d. Government supervision
38. Section 56 of the Negotiable Instruments Act deals with:
a. Indorsement for part of sum due
b. Negotiation by delivery
c. Forgery
d. Payment
39. Writing transferring only part of the amount due on the instrument:
a. Is valid negotiation
b. Is not valid negotiation
c. Requires bank approval
d. Requires court order
40. Partial transfer of negotiable instrument amount is:
a. Allowed freely
b. Not valid for negotiation
c. Mandatory
d. Bank regulated
41. If part of the amount has already been paid:
a. Instrument becomes void
b. A note of such payment may be indorsed
c. Negotiation stops
d. Instrument cancelled
42. After noting part payment, the instrument may be negotiated for:
a. Full amount
b. Balance amount
c. Bank charges
d. Government tax
43. Section 56 applies to:
a. Promissory notes
b. Bills of exchange
c. Cheques
d. All of the above
44. Indorsement transferring partial amount without payment record:
a. Valid negotiation
b. Invalid negotiation
c. Court matter
d. Bank issue
45. Recording part payment ensures:
a. Proper negotiation for remaining balance
b. Cancellation of instrument
c. Bank transfer
d. Government claim
46. Section 56 primarily prevents:
a. Partial transfer of liability
b. Forgery
c. Dishonour
d. Bank fraud
47. Negotiation for balance becomes possible only after:
a. Bank confirmation
b. Noting the part payment
c. Court order
d. Drawer consent
48. Section 57 of the Negotiable Instruments Act deals with:
a. Negotiation by legal representative
b. Holder rights
c. Payment
d. Forgery
49. A legal representative of a deceased person cannot negotiate by delivery only:
a. Any instrument
b. Instrument payable to bearer
c. Instrument payable to order indorsed by deceased but not delivered
d. Cheque only
50. The restriction applies when the instrument was:
a. Delivered by deceased
b. Indorsed by deceased but not delivered
c. Signed by bank
d. Registered
51. Legal representative must not rely only on:
a. Indorsement
b. Delivery
c. Delivery alone
d. Court approval
52. The instrument covered includes:
a. Promissory note
b. Bill of exchange
c. Cheque
d. All of the above
53. The instrument must be payable:
a. To bearer
b. To order
c. To government
d. To bank
54. Section 58 of the Negotiable Instruments Act deals with:
a. Instruments obtained by unlawful means or consideration
b. Holder rights
c. Agency
d. Dishonour
55. When a negotiable instrument is obtained by fraud, offence or unlawful consideration:
a. Possessor automatically gets rights
b. Possessor cannot claim payment
c. Bank becomes liable
d. Drawer becomes liable
56. The restriction applies to persons claiming through:
a. Holder
b. Bank
c. Person who found or obtained the instrument unlawfully
d. Government
57. Such possessor can recover payment only if:
a. Court permits
b. He is holder in due course
c. Bank confirms
d. Drawer agrees
58. A person through whom he claims may also protect him if that person was:
a. Payee
b. Banker
c. Drawee
d. Holder in due course
59. Section 58 mainly protects:
a. Fraudsters
b. Innocent parties
c. Government
d. Bank officers
60. Instruments covered include:
a. Promissory note
b. Bill of exchange
c. Cheque
d. All of the above
61. Unlawful means include:
a. Fraud
b. Offence
c. Theft
d. All of the above
62. Without holder in due course protection:
a. Payment cannot be claimed
b. Payment must be made
c. Bank must pay
d. Drawer must accept
63. Section 59 of the Negotiable Instruments Act deals with:
a. Instrument acquired after dishonour or when overdue
b. Negotiation by delivery
c. Forgery
d. Agency
64. A holder who acquires instrument after dishonour with notice:
a. Gets full rights
b. Gets only rights of his transferor
c. Gets bank rights
d. Gets government rights
65. Dishonour may occur due to:
a. Non-acceptance
b. Non-payment
c. Both A and B
d. Forgery
66. A holder acquiring instrument after maturity has:
a. Rights of holder in due course
b. Rights equal to transferor
c. Unlimited rights
d. No rights
67. The proviso relates to:
a. Accommodation note or bill
b. Forged instrument
c. Bank instrument
d. Government security
68. An accommodation instrument is made:
a. For government
b. For court order
c. For bank deposit
d. To enable a party to raise money
69. A person acquiring such instrument after maturity:
a. Cannot recover
b. May recover from prior party if he acted in good faith and for consideration
c. Must file suit
d. Must seek bank approval
70. The instrument must have been made without:
a. Consideration
b. Signature
c. Delivery
d. Acceptance
71. Recovery is allowed against:
a. Bank
b. Prior party
c. Government
d. Court
72. Section 59 balances rights between:
a. Subsequent holders and prior parties
b. Bank and drawer
c. Government and holder
d. Drawer and bank
73. Section 60 of the Negotiable Instruments Act deals with:
a. Duration of negotiability of instrument
b. Forgery
c. Agency
d. Dishonour
74. A negotiable instrument may be negotiated:
a. Until acceptance
b. Until payment or satisfaction
c. Until endorsement
d. Until bank approval
75. Negotiation continues even after maturity except by:
a. Holder
b. Maker, drawee or acceptor
c. Bank
d. Government
76. Maker cannot negotiate instrument:
a. Before maturity
b. After maturity
c. Before payment
d. Before endorsement
77. Drawee cannot negotiate instrument:
a. After maturity
b. Before maturity
c. After endorsement
d. Before acceptance
78. Acceptor cannot negotiate instrument:
a. After maturity
b. Before maturity
c. After endorsement
d. After acceptance
79. Negotiation stops after:
a. Acceptance
b. Endorsement
c. Payment or satisfaction by maker, drawee or acceptor
d. Bank notice
80. Payment or satisfaction must occur:
a. At or after maturity
b. Before issue
c. Before endorsement
d. Before acceptance
81. Section 61 of the Negotiable Instruments Act deals with:
a. Presentment for acceptance
b. Presentment for payment
c. Dishonour
d. Negotiation
82. A bill of exchange payable after sight must be:
a. Registered
b. Presented for acceptance
c. Endorsed
d. Cancelled
83. Presentment for acceptance must be made to:
a. Drawer
b. Drawee
c. Indorser
d. Bank manager
84. Presentment must be made within:
a. One month
b. A reasonable time after the bill is drawn
c. Three days
d. One year
85. Presentment must be made during:
a. Night hours
b. Business hours on a business day
c. Any time
d. Court hours
86. If the drawee cannot be found after reasonable search:
a. Bill becomes void
b. Bill is dishonoured
c. Bill is cancelled
d. Drawer becomes holder
87. If the bill directs presentment at a particular place:
a. It may be presented anywhere
b. It must be presented at that place
c. Only bank may present
d. Court must approve
88. Failure to present the bill for acceptance results in:
a. All parties remain liable
b. No party is liable to the person making such default
c. Bank becomes liable
d. Government becomes liable
89. Presentment may be made by:
a. Any person
b. Person entitled to demand acceptance
c. Bank officer only
d. Court officer
90. Presentment through registered post is valid when:
a. Bank requires it
b. Authorized by agreement or usage
c. Court orders
d. Drawer agrees
91. Section 62 of the Negotiable Instruments Act deals with:
a. Presentment of promissory note for sight
b. Presentment for payment
c. Acceptance
d. Dishonour
92. A promissory note payable after sight must be presented to:
a. Drawer
b. Maker
c. Indorser
d. Drawee
93. Presentment must be made by:
a. Bank officer
b. Person entitled to demand payment
c. Government officer
d. Court official
94. Presentment must occur:
a. Within reasonable time after the note is made
b. After maturity only
c. After bank approval
d. Within three days
95. Presentment must occur during:
a. Business hours on a business day
b. Any time
c. Night hours
d. Court hours
96. If maker cannot be found after reasonable search:
a. Note becomes void
b. Liability ceases
c. Presentment fails
d. Holder becomes liable
97. Failure to present the note for sight results in:
a. Maker remains liable
b. No party is liable to person making such default
c. Bank becomes liable
d. Government becomes liable
98. Presentment must be made when note is payable:
a. At sight
b. After sight
c. On demand
d. At maturity
99. The person demanding payment must be:
a. Holder or authorized person
b. Banker only
c. Government officer
d. Drawer only
100. Section 63 of the Negotiable Instruments Act deals with:
a. Drawee’s time for deliberation
b. Presentment for payment
c. Negotiation
d. Dishonour
101. When a bill of exchange is presented for acceptance:
a. Drawee must accept immediately
b. Drawee may demand time for consideration
c. Holder must cancel bill
d. Bank must decide
102. The drawee is entitled to:
a. 24 hours
b. 36 hours
c. 48 hours
d. 72 hours
103. The time allowed excludes:
a. Sundays only
b. Public holidays
c. Night hours
d. Banking holidays only
104. The person who must allow time is:
a. Drawer
b. Holder
c. Payee
d. Bank officer
105. Section 64 of the Negotiable Instruments Act deals with:
a. Presentment for payment
b. Acceptance
c. Negotiation
d. Dishonour
106. Promissory notes must be presented for payment to:
a. Drawer
b. Drawee
c. Maker
d. Indorser
107. Bills of exchange must be presented for payment to:
a. Maker
b. Drawer
c. Payee
d. Acceptor
108. Cheques must be presented for payment to:
a. Indorser
b. Drawee
c. Maker
d. Payee
109. Presentment must be made by:
a. Bank officer
b. Government officer
c. Holder or on behalf of holder
d. Drawer
110. Failure to present instrument for payment results in:
a. All parties liable
b. Bank liable
c. Government liable
d. Other parties not liable to holder
111. Presentment by registered post is valid when:
a. Authorized by agreement or usage
b. Court orders
c. Bank requires
d. Drawer permits
112. Exception under Section 64 applies to:
a. Bills of exchange
b. Cheques
c. Bearer notes
d. Promissory note payable on demand not payable at specified place
113. For truncated cheques, drawee bank may demand:
a. Additional information
b. Physical cheque for verification
c. Both A and B
d. No verification
114. If payment is made after verification of truncated cheque:
a. Cheque must be returned
b. Cheque destroyed
c. Cheque is retained by drawee bank
d. Cheque cancelled
115. Section 65 of the Negotiable Instruments Act deals with:
a. Hours for presentment
b. Presentment for acceptance
c. Negotiation
d. Dishonour
116. Presentment for payment must be made during:
a. Night hours
b. Usual hours of business
c. Court hours
d. Government hours
117. If presentment is at a banker:
a. Any time
b. Within banking hours
c. Only morning hours
d. After closing time
118. Presentment outside business hours:
a. Invalid
b. Valid
c. Requires court approval
d. Requires bank approval
119. Section 66 of the Negotiable Instruments Act deals with:
a. Presentment for payment of instrument payable after date or sight
b. Negotiation
c. Dishonour
d. Acceptance
120. A promissory note payable after date must be presented:
a. Immediately
b. At maturity
c. After three days
d. After notice
121. A bill payable after sight must be presented:
a. At maturity
b. At issue
c. After endorsement
d. At bank request
122. Presentment must occur:
a. Before maturity
b. At maturity
c. After maturity
d. Any time
123. Failure to present at maturity:
a. Has no effect
b. May discharge parties
c. Cancels instrument
d. Transfers ownership
124. Section 67 of the Negotiable Instruments Act deals with:
a. Instalment payment presentment
b. Negotiation
c. Dishonour
d. Acceptance
125. A promissory note payable by instalments must be presented:
a. On due date
b. On third day after instalment date
c. After maturity
d. After endorsement
126. The three days allowed are:
a. Days of grace
b. Court days
c. Bank holidays
d. Public holidays
127. Presentment must occur for:
a. Each instalment
b. Final instalment only
c. First instalment only
d. Bank instalment
128. Non-payment of instalment has the same effect as:
a. Dishonour of note at maturity
b. Acceptance
c. Negotiation
d. Bank refusal
129. Section 68 of the Negotiable Instruments Act deals with:
a. Presentment at specified place only
b. Negotiation
c. Acceptance
d. Dishonour
130. When an instrument is payable at a specified place and not elsewhere:
a. It may be presented anywhere
b. It must be presented at that place
c. It must be presented in court
d. It must be presented to bank only
131. Failure to present at the specified place:
a. Has no effect
b. Discharges parties
c. Cancels instrument
d. Transfers liability to bank
132. Instruments covered include:
a. Promissory notes
b. Bills of exchange
c. Cheques
d. All of the above
133. Section 69 of the Negotiable Instruments Act deals with:
a. Instrument payable at specified place
b. Negotiation
c. Acceptance
d. Dishonour
134. A promissory note payable at a specified place must be presented:
a. Anywhere
b. At that specified place
c. In court
d. To bank only
135. Presentment at specified place is required to charge:
a. Maker
b. Drawer
c. Both A and B
d. Bank
136. Section 69 applies to:
a. Promissory notes
b. Bills of exchange
c. Both A and B
d. Cheques only
137. Failure to present at specified place may:
a. Cancel instrument
b. Affect liability of maker or drawer
c. Transfer ownership
d. Increase amount
138. The holder must follow:
a. Place specified in instrument
b. Bank rule
c. Court order
d. Government instruction
139. Section 70 of the Negotiable Instruments Act deals with:
a. Presentment when no exclusive place specified
b. Negotiation
c. Acceptance
d. Dishonour
140. When no place is specified for payment:
a. Instrument becomes void
b. Presentment must be at place of business or residence
c. Bank decides place
d. Court decides place
141. Presentment should be made at:
a. Place of business of maker, drawee or acceptor
b. Usual residence
c. Both A and B
d. Bank only
142. Section 70 applies to:
a. Promissory notes
b. Bills of exchange
c. Both A and B
d. Cheques only
143. The person responsible for payment may be:
a. Maker
b. Drawee
c. Acceptor
d. All of the above
144. Section 71 of the Negotiable Instruments Act deals with:
a. Presentment when maker has no known place of business or residence
b. Presentment for acceptance
c. Presentment for payment
d. Dishonour
145. Section 71 applies when the maker, drawee or acceptor:
a. Refuses payment
b. Has no known place of business or fixed residence
c. Is bankrupt
d. Is deceased
146. Section 71 also requires that:
a. No place for presentment is specified in the instrument
b. The bank refuses payment
c. The drawer cancels the instrument
d. The holder is absent
147. In such case presentment may be made:
a. At court
b. At bank
c. In person wherever the party can be found
d. At government office
148. The rule applies to presentment for:
a. Acceptance
b. Payment
c. Both acceptance and payment
d. Dishonour only
149. The persons covered under Section 71 include:
a. Maker
b. Drawee
c. Acceptor
d. All of the above
150. Section 72 of the Negotiable Instruments Act deals with:
a. Presentment of cheque to charge drawer
b. Presentment for acceptance
c. Dishonour
d. Negotiation
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