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The Negotiable Instrument, 1881 MCQs SET-5
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1. A cheque is dishonoured by non-payment when:
a. Drawer defaults
b. Drawee defaults in payment
c. Payee refuses
d. Bank refuses endorsement
2. Dishonour occurs when payment is:
a. Not demanded
b. Duly required but not made
c. Delayed
d. Partially made
3. Section 92 applies to:
a. Promissory notes
b. Bills of exchange
c. Cheques
d. All of the above
4. The person responsible for paying a cheque is:
a. Drawer
b. Drawee bank
c. Payee
d. Holder
5. Default in payment leads to:
a. Dishonour
b. Negotiation
c. Acceptance
d. Cancellation
6. Section 93 of the Negotiable Instruments Act deals with:
a. Notice of dishonour
b. Negotiation
c. Acceptance
d. Interest
7. When an instrument is dishonoured:
a. No notice required
b. Notice must be given to parties sought to be made liable
c. Only bank informed
d. Court informed
8. Notice may be given by:
a. Holder
b. Any party still liable
c. Both A and B
d. Drawee
9. Notice must be given to:
a. All parties sought to be severally liable
b. One of several parties sought to be jointly liable
c. Both A and B
d. Bank officer
10. Notice of dishonour is not required to be given to:
a. Indorser
b. Maker of promissory note
c. Drawer
d. Payee
11. Notice is also unnecessary to:
a. Drawee
b. Acceptor
c. Both A and B
d. Indorser
12. Section 94 of the Negotiable Instruments Act deals with:
a. Mode of giving notice of dishonour
b. Negotiation
c. Acceptance
d. Interest
13. Notice may be given to:
a. Authorized agent
b. Legal representative of deceased
c. Assignee of insolvent
d. All of the above
14. Notice may be:
a. Oral
b. Written
c. Either oral or written
d. Only written
15. Written notice may be sent by:
a. Messenger
b. Post
c. Court
d. Government
16. Notice must inform the party:
a. Instrument dishonoured
b. How it was dishonoured
c. He will be held liable
d. All of the above
17. Notice must be given:
a. Within reasonable time
b. Immediately
c. Within 48 hours
d. After suit
18. Notice should be sent to:
a. Place of business
b. Residence
c. Both A and B
d. Court
19. If a posted notice miscarries:
a. Notice invalid
b. Notice still valid
c. Court decides
d. Bank decides
20. The form of notice:
a. Must be specific format
b. May be in any form
c. Must be court format
d. Must be bank format
21. Section 94 regulates:
a. Method of giving dishonour notice
b. Payment rules
c. Negotiation rules
d. Acceptance rules
22. Section 95 of the Negotiable Instruments Act deals with:
a. Transmission of notice of dishonour
b. Negotiation
c. Acceptance
d. Payment
23. A party receiving notice of dishonour must:
a. Keep silent
b. Inform prior parties
c. Inform bank
d. Inform court
24. Notice must be given within:
a. Fixed time
b. Reasonable time
c. One month
d. One year
25. The notice must be given to:
a. Prior parties liable
b. Bank officer
c. Government
d. Court
26. The rule applies when the receiver wants to:
a. Avoid liability
b. Make prior parties liable to him
c. Transfer ownership
d. Cancel instrument
27. Section 96 of the Negotiable Instruments Act deals with:
a. Agent for presentment
b. Negotiation
c. Acceptance
d. Payment
28. When instrument is deposited with an agent for presentment:
a. Agent loses rights
b. Agent gets time to give notice
c. Holder must act immediately
d. Bank decides
29. The agent has the same time to notify his principal as:
a. Holder has to give notice
b. Drawer has to pay
c. Bank has to process
d. Court allows
30. The principal then gets:
a. No time
b. Further similar period to give notice
c. Double time
d. Court time
31. The rule ensures:
a. Proper communication chain
b. Bank regulation
c. Government control
d. Court supervision
32. Section 97 of the Negotiable Instruments Act deals with:
a. Notice to deceased party
b. Negotiation
c. Acceptance
d. Payment
33. If notice of dishonour is sent to a party who is dead:
a. Notice invalid
b. Notice valid if sender unaware of death
c. Court must approve
d. Bank must verify
34. The condition for validity is:
a. Sender knew of death
b. Sender was ignorant of death
c. Court permission
d. Bank approval
35. The notice is considered:
a. Void
b. Sufficient
c. Invalid
d. Conditional
36. Section 98 of the Negotiable Instruments Act deals with:
a. Cases where notice of dishonour unnecessary
b. Negotiation
c. Acceptance
d. Interest
37. Notice of dishonour is unnecessary when:
a. Party entitled dispenses with it
b. Drawer countermanded payment
c. Both A and B
d. Court orders
38. Notice unnecessary when party charged:
a. Suffers damage
b. Cannot suffer damage from lack of notice
c. Refuses payment
d. Endorses instrument
39. Notice unnecessary when party entitled:
a. Cannot be found after due search
b. Refuses notice
c. Changes address
d. Moves abroad
40. Notice unnecessary when person bound to give notice:
a. Delays intentionally
b. Unable to give it without fault of his own
c. Bank refuses
d. Court delays
41. Notice unnecessary to charge drawer when:
a. Acceptor also drawer
b. Bank pays
c. Holder refuses
d. Drawer bankrupt
42. Notice unnecessary for:
a. Negotiable promissory note
b. Non-negotiable promissory note
c. Bill of exchange
d. Cheque
43. Notice unnecessary when party entitled to notice:
a. Refuses payment
b. Promises unconditionally to pay knowing facts
c. Changes bank
d. Files suit
44. Section 99 of the Negotiable Instruments Act deals with:
a. Noting of dishonour
b. Protest
c. Notice of dishonour
d. Negotiation
45. Noting may be done when a promissory note or bill of exchange is:
a. Accepted
b. Negotiated
c. Dishonoured by non-acceptance or non-payment
d. Endorsed
46. Noting is done by:
a. Banker
b. Notary public
c. Court officer
d. Drawer
47. Noting may be made:
a. On the instrument
b. On a paper attached to the instrument
c. Partly on each
d. All of the above
48. Noting must be made:
a. Immediately
b. Within reasonable time after dishonour
c. Within 48 hours
d. After filing suit
49. Noting must specify:
a. Date of dishonour
b. Reason for dishonour
c. Notary’s charges
d. All of the above
50. If the instrument is not expressly dishonoured:
a. Noting impossible
b. Reason why holder treats it as dishonoured must be stated
c. Court must decide
d. Bank must verify
51. The purpose of noting is:
a. Inform bank
b. Record dishonour officially
c. Transfer ownership
d. Cancel instrument
52. Noting is preliminary step to:
a. Protest
b. Payment
c. Negotiation
d. Acceptance
53. Section 100 of the Negotiable Instruments Act deals with:
a. Protest
b. Negotiation
c. Acceptance
d. Payment
54. Protest may be made when a promissory note or bill of exchange is:
a. Accepted
b. Negotiated
c. Dishonoured by non-acceptance or non-payment
d. Paid
55. Protest must be made by:
a. Bank officer
b. Notary public
c. Court officer
d. Drawer
56. Protest must be made:
a. Within reasonable time
b. Within 24 hours
c. Within one week
d. Before maturity
57. Protest is:
a. Certificate by notary public noting dishonour
b. Bank record
c. Court order
d. Drawer’s statement
58. Protest for better security arises when:
a. Drawer becomes insolvent
b. Acceptor becomes insolvent or credit impeached
c. Holder bankrupt
d. Payee dies
59. Protest for better security may occur:
a. After maturity
b. Before maturity
c. After payment
d. After endorsement
60. The notary may demand:
a. Acceptance
b. Payment
c. Better security
d. All of the above
61. Section 101 of the Negotiable Instruments Act deals with:
a. Contents of protest
b. Noting
c. Notice of dishonour
d. Negotiation
62. A protest must contain:
a. Instrument itself or transcript
b. Names of parties
c. Statement of demand
d. All of the above
63. The protest must include:
a. Literal transcript of instrument if not attached
b. Only summary
c. Bank record
d. Court statement
64. It must mention the name:
a. For whom protested
b. Against whom protested
c. Both A and B
d. Banker
65. Protest must state:
a. Payment demanded
b. Acceptance demanded
c. Better security demanded
d. All applicable demands
66. It must record:
a. Terms of answer given
b. Statement of no answer
c. Statement that party could not be found
d. All of the above
67. Protest must include:
a. Place and time of dishonour
b. Place and time of refusal of better security
c. Both A and B
d. Only time
68. Protest must contain:
a. Signature of notary public
b. Bank seal
c. Drawer’s signature
d. Court stamp
69. In case of acceptance for honour or payment for honour, protest must mention:
a. Person making acceptance/payment
b. Person for whom made
c. Manner of acceptance/payment
d. All of the above
70. Demand by notary may be made:
a. Personally
b. Through clerk
c. By registered letter (if allowed)
d. All of the above
71. Section 102 of the Negotiable Instruments Act deals with:
a. Notice of protest
b. Negotiation
c. Acceptance
d. Payment
72. When law requires protest:
a. Notice of dishonour unnecessary
b. Notice of protest must be given
c. Bank decides notice
d. Court decides notice
73. Notice of protest is given:
a. Instead of notice of dishonour
b. Along with notice of dishonour
c. After suit
d. After acceptance
74. Notice must be given:
a. In same manner as notice of dishonour
b. In different manner
c. By court only
d. By bank only
75. The notice is subject to:
a. Same conditions as notice of dishonour
b. Bank rules
c. Court orders
d. Government rules
76. Notice may be given by:
a. Holder
b. Notary public
c. Bank officer
d. Drawer
77. Protest relates to:
a. Dishonoured instrument
b. Accepted instrument
c. Negotiated instrument
d. Paid instrument
78. Section 103 of the Negotiable Instruments Act deals with:
a. Protest for non-payment after dishonour by non-acceptance
b. Negotiation
c. Acceptance
d. Interest
79. The section applies to:
a. Promissory notes
b. Bills of exchange
c. Cheques
d. Currency notes
80. The bill must be:
a. Drawn payable at place other than drawee's residence
b. Payable to bearer
c. Payable to order
d. Payable on demand
81. The bill must first be dishonoured by:
a. Non-payment
b. Non-acceptance
c. Negotiation
d. Cancellation
82. After dishonour by non-acceptance:
a. Further presentment needed
b. Bill may be protested for non-payment
c. Bill cancelled
d. Bank liable
83. Section 104 of the Negotiable Instruments Act deals with:
a. Protest of foreign bills
b. Negotiation
c. Acceptance
d. Interest
84. The section applies to:
a. Inland bills
b. Foreign bills of exchange
c. Promissory notes
d. Cheques
85. Foreign bills must be protested:
a. Always
b. When required by law of place where drawn
c. Only when bank requires
d. Only when holder demands
86. Section 104A of the Negotiable Instruments Act deals with:
a. When noting equivalent to protest
b. Negotiation
c. Acceptance
d. Interest
87. When protest must occur within specified time:
a. Noting before that time is sufficient
b. Protest must occur immediately
c. Court approval needed
d. Bank approval needed
88. The noting must occur:
a. Before expiration of specified time
b. After suit
c. After payment
d. After acceptance
89. Formal protest may be extended:
a. Only immediately
b. At any time later
c. Only within 24 hours
d. Only before maturity
90. The protest takes effect from:
a. Date of extension
b. Date of noting
c. Date of dishonour
d. Date of acceptance
91. Section 105 of the Negotiable Instruments Act deals with:
a. Determination of reasonable time
b. Negotiation
c. Acceptance
d. Interest
92. Reasonable time is considered for:
a. Presentment for acceptance
b. Presentment for payment
c. Giving notice of dishonour
d. All of the above
93. Reasonable time is also relevant for:
a. Noting of dishonour
b. Acceptance
c. Negotiation
d. Payment
94. In determining reasonable time, regard must be had to:
a. Nature of the instrument
b. Usual course of dealing
c. Both A and B
d. Bank policy
95. The course of dealing refers to:
a. Usual practice regarding similar instruments
b. Government rules
c. Court rules
d. Bank charges
96. Public holidays in calculating reasonable time are:
a. Included
b. Excluded
c. Doubled
d. Ignored completely
97. Reasonable time depends on:
a. Fixed statutory period
b. Circumstances and nature of instrument
c. Bank order
d. Court order
98. The concept of reasonable time applies to:
a. Holder’s duties
b. Bank’s duties
c. Court’s duties
d. Government duties
99. The section provides guidance for:
a. Time calculation in negotiable instrument procedures
b. Payment rules
c. Interest calculation
d. Negotiation rights
100. Section 106 of the Negotiable Instruments Act deals with:
a. Reasonable time for giving notice of dishonour
b. Negotiation
c. Acceptance
d. Payment
101. If the holder and the notified party are in different places:
a. Notice must be given immediately
b. Notice is reasonable if dispatched by next post
c. Notice unnecessary
d. Bank decides
102. Notice dispatched on the day next after dishonour is considered:
a. Delayed
b. Within reasonable time
c. Invalid
d. Conditional
103. If both parties live or carry on business in the same place:
a. Notice must reach immediately
b. Notice must be dispatched in time to reach the next day
c. Notice unnecessary
d. Court approval needed
104. The section mainly relates to:
a. Notice of dishonour
b. Notice of payment
c. Notice of acceptance
d. Notice of negotiation
105. Dispatch of notice means:
a. Sending the notice
b. Receiving the notice
c. Filing in court
d. Bank processing
106. Section 107 of the Negotiable Instruments Act deals with:
a. Reasonable time for transmitting notice of dishonour
b. Negotiation
c. Acceptance
d. Payment
107. The section applies to:
a. Holder
b. Party receiving notice of dishonour
c. Bank officer
d. Government
108. Such party may seek to enforce his rights against:
a. Subsequent party
b. Prior party
c. Drawee
d. Bank
109. The party must transmit notice:
a. Within reasonable time
b. Immediately
c. Within 48 hours
d. Within one week
110. The reasonable time allowed is:
a. Same as holder would have had
b. Double the holder’s time
c. Half the holder’s time
d. Court decided
111. The time is calculated from:
a. Date of dishonour
b. Date of receipt of notice
c. Date of payment
d. Date of acceptance
112. The rule ensures:
a. Continuity in chain of notice
b. Bank payment
c. Court intervention
d. Government regulation
113. If notice is not transmitted within reasonable time:
a. Prior parties may be discharged
b. Bank liable
c. Instrument cancelled
d. Holder liable
114. Transmission refers to:
a. Forwarding notice to prior parties
b. Sending cheque to bank
c. Filing suit
d. Payment process
115. Section 108 of the Negotiable Instruments Act deals with:
a. Acceptance for honour
b. Payment for honour
c. Protest
d. Dishonour
116. Acceptance for honour occurs when a bill is:
a. Accepted normally
b. Noted or protested for non-acceptance or better security
c. Paid
d. Negotiated
117. Acceptance for honour may be made by:
a. Any person already liable
b. Any person not already liable on the bill
c. Only the holder
d. Only the bank
118. Such acceptance requires:
a. Consent of drawer
b. Consent of holder
c. Consent of drawee
d. Court approval
119. The acceptance must be made:
a. Orally
b. By writing on the bill
c. By bank record
d. By court declaration
120. Acceptance for honour is made for:
a. Any party to the bill
b. Only the holder
c. Only the bank
d. Government
121. The bill must have been:
a. Paid
b. Protested or noted
c. Endorsed
d. Cancelled
122. The person accepting for honour becomes:
a. Drawee
b. Holder
c. Acceptor for honour
d. Drawer
123. Section 109 of the Negotiable Instruments Act deals with:
a. Manner of acceptance for honour
b. Negotiation
c. Payment
d. Protest
124. Acceptance for honour must be made:
a. Orally
b. In writing on the bill
c. By bank entry
d. By court order
125. The person accepting must:
a. Sign under his hand
b. Stamp instrument
c. Register bill
d. Notify court
126. The declaration must state that he accepts:
a. Normally
b. Under protest
c. For payment
d. By negotiation
127. Acceptance may be made for honour of:
a. Drawer
b. Particular indorser
c. Generally for honour
d. All of the above
128. Section 110 of the Negotiable Instruments Act deals with:
a. Acceptance without specifying honour
b. Negotiation
c. Protest
d. Payment
129. If acceptance for honour does not specify the party:
a. It becomes invalid
b. It is deemed for honour of drawer
c. It is deemed for indorser
d. It is void
130. Section 111 of the Negotiable Instruments Act deals with:
a. Liability of acceptor for honour
b. Negotiation
c. Protest
d. Payment
131. An acceptor for honour agrees to:
a. Accept bill only
b. Pay the bill if drawee does not
c. Cancel bill
d. Transfer ownership
132. Liability is towards:
a. Parties subsequent to the party honoured
b. Bank
c. Court
d. Government
133. If drawee fails to pay:
a. Acceptor for honour must pay
b. Holder loses rights
c. Bank becomes liable
d. Drawer discharged
134. Party honoured and prior parties must:
a. Pay bank
b. Compensate acceptor for honour
c. Cancel instrument
d. Transfer rights
135. Compensation includes:
a. Loss
b. Damage
c. Both A and B
d. Bank charges only
136. Acceptor for honour is liable only if bill:
a. Presented at maturity
b. Paid immediately
c. Negotiated
d. Cancelled
137. Presentment must occur:
a. On or before maturity
b. Not later than day after maturity
c. Within one week
d. After protest
138. Section 112 of the Negotiable Instruments Act deals with:
a. Conditions to charge acceptor for honour
b. Negotiation
c. Protest
d. Payment
139. An acceptor for honour may be charged only when:
a. Bill presented to drawee for payment
b. Bill dishonoured by drawee
c. Bill noted or protested
d. All of the above
140. Presentment must occur:
a. Before acceptance
b. At maturity
c. Before negotiation
d. After endorsement
141. Dishonour must occur by:
a. Non-acceptance
b. Non-payment
c. Non-negotiation
d. Cancellation
142. The dishonour must be:
a. Noted
b. Protested
c. Both A and B
d. Registered
143. Without protest or noting:
a. Acceptor for honour liable
b. Acceptor for honour not liable
c. Bank liable
d. Drawer liable
144. The holder must:
a. Present bill first
b. Negotiate bill
c. Cancel bill
d. Endorse bill
145. Section 113 of the Negotiable Instruments Act deals with:
a. Payment for honour
b. Acceptance for honour
c. Protest
d. Negotiation
146. Payment for honour occurs when a bill:
a. Accepted
b. Protested for non-payment
c. Negotiated
d. Endorsed
147. Payment for honour may be made by:
a. Any person
b. Holder only
c. Drawee only
d. Drawer only
148. Payment must be made for honour of:
a. Party liable to pay
b. Bank
c. Court
d. Government
149. Before payment, the payer must declare before:
a. Bank
b. Court
c. Notary public
d. Drawer
150. The declaration must state:
a. Party for whose honour payment made
b. Bank details
c. Drawer’s address
d. Court number
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