MCQs on Negotiable Instruments Act with Answers

Here you can find the MCQs on Negotiable instruments Act with answers. This multiple questions on Negotiable instruments Act 1881 can be considered for MCQ’s on Business Law or MCQ’s on Legal Aspect of Business for MBA, BBA, B.Com, BCS ect..

MCQ on Negotiable instruments Act 1881: 

1. _______ means ‘something legally transferable from one person to another for a consideration’.

a. Instrument             b. Negotiable             c. Negotiable Instruments             d. all of the above

Ans. b

2. ______ means ‘ a written document by which some legal rights are created in favor of some person’

a. Instrument             b. Negotiable            c. Negotiable Instruments             d. all of the above

Ans. a

3. Negotiable instrument means a promissory note, bill of exchange or cheque, payable to ___________

a. Bearer            b. order             c. either to bearer or order            d. neither bearer nor order

Ans. c

4. A negotiable instrument is freely transferable, by delivery if it is a/an ______________ instrument.

a. order            b. bearer             c. both a & B             d. None of the above

Ans. b

5. A negotiable instrument is freely transferable, by endorsement if it is a/an ____________ instrument.

a. order             b. bearer             c. both a & b             d. None of the above

Ans. a

6. The transferee of a negotiable instrument is the one

a. who transfer the instrument                                                 b. on whose name it is transferred

c. who en chases it                                                                        d. none of the above

Ans. b

7. The transferor of a negotiable instrument is the one

a. who transfer the instrument                         b. on whose name it is transferred

c. who en chases it                                                 d. none of the above

Ans. a

8. The instrument must be taken in good faith and with a

a. Interest                         b. consideration                         c. legal relation                         d. business motive

Ans. b

9. when an instrument has been lost it is presumed that it was ____________

a. expired                         b. duly stamped                        c. stolen                        d. misplaced

Ans. b

10. which of the below given sentence is proper as to considered to be written in negotiable instruments

a. I promise to pay B rs.500                                                b. Mr. B I.O (owe).U Rs.1000.

c. I am liable to pay you Rs.1000.                                      d. none of the above.

Ans. d

11. _________ an instrument in writing containing an unconditional undertaking signed by the maker to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument

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a. Promissory Note                             b. bill of exchange                         c. Cheque                         d. none of the above

Ans. a

12. ______________ is an instrument in writing, containing an unconditional order, signed by the maker, directing a certain person, to a pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument

a. Promissory Note                         b. bill of exchange                         c. Cheque                         d. none of the above

Ans. b

13. The number of parties to a bill of exchange is _______

a. 2                                                 b. 4                                                 c. 6                                                 d. 3

Ans. d

14. The number of parties to a Promissory Note is _______

a. 2                                                 b. 4                                                c. 6                                                 d. 3

Ans. a

15. Sec. 4 of negotiable instruments Act 1880 deals with

a. Promissory Note                         b. bill of exchange                         c. Cheque                         d. none of the above

Ans. a

16. Sec. 5 of negotiable instruments Act 1880 deals with

a. Promissory Note                         b. bill of exchange                        c. Cheque                         d. none of the above

Ans. b

17. Sec. 6 of negotiable instruments Act 1880 deals with

a. Promissory Note                        b. bill of exchange                        c. Cheque                         d. none of the above

Ans. c

18. The parties of a bill of exchange are

a. drawe acceptor and payee                                                b. banker drawee and payee

c. banker acceptor and payee                                                d. banker drawer and payee

Ans. a

19. __________________ cannot be a bearer instrument

a. Promissory Note                        b. bill of exchange                        c. Cheque                         d. none of the above

Ans. a

20. Acceptance is _________________ in case of bill of exchange

a. compulsory                        b. optional                         c. not compulsory                        d. adequate

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Ans. a

21. Acceptance is _________________ in case of bill of exchange

a. compulsory                         b. optional                        c. not compulsory                         d. not necessary

Ans. d

22. Drawer is both debtor to one and creditor to another in case of ________________

a. Promissory Note                        b. bill of exchange                         c. Cheque                         d. none of the above

Ans. b

23. Liability of maker is __________ in case of bill of exchange

a. primary                         b. unlimited                        c. unconditional                         d. secondary

Ans. d

24. ___________ is an order to pay the third party

a. Promissory Note                        b. bill of exchange                         c. Cheque                         d. none of the above

Ans. a

25. A Promissory Note or Bill of Exchange can be made payable

a. On demand                                                                         b. On a specific date

c. After a specified period – months or days.                        d. all of the above

Ans. d

26. To calculate the maturity date of a negotiable instrument the drawing date to be ___for counting

a. included                        b. considered                         c. excluded                        d. non of the above

Ans. c

27. If the instrument is not ‘on demand’ ___________ days of grace is granted.

a. 7                                                b. 5                                                 c. 3                                                 d. 4

Ans. c

28. when the is crossed with Two parallel lines or with word ‘& Co.’ etc. this crossing is known as

a. general crossing                    b. special crossing                     c. restrictive crossing                      d. none of the above

Ans. a

29. when the is crossed with Two parallel lines or with ‘A/c payee only.’ etc. this crossing is known as

a. general crossing                         b. special crossing                      c. restrictive crossing                      d. none of the above

Ans. c

30. In the case of Bill of Exchange drawee is the ____________.

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a. maker                        b. acceptor                        c. payee                         d. none of the above

Ans. b

31. When the loss of cheque is intimated to the bank. It is advisable to get the cheque

a. dishonored                         b. cancelled                        c. stalled                         d. countermanded.

Ans. d

32. When bank has reason to believe that the title of the presenter is defective , then the cheque will be

a. dishonored                        b. cancelled                         c. stalled                         d. countermanded.

Ans. a

33. A holder in due course will get protected from earlier defect of

a. no consideration                        b. conditional delivery                      c. unlawful means                      d. all of the above

Ans. d

34. _____of an instrument means a person legally entitled to possess and receive in his own name

a. owner                         b. maker                         c. holder                         d. receiver

Ans.  c

35. Holder of an instrument is a person who holds the instrument

a. for a longer period                      b. before maturity                     c. after maturity                   d. on behalf of the owner

Ans. b

36. Countermanding of a cheque is also known as

a. cancellation                         b. dishonor                         c. stop payment                         d. payment through counter

Ans. c

37. ‘Something legally transferable from one person to another for a consideration’ is known as

a. Endorsement                        b. bill of exchange                         c. promissory note                         d. negotiation

Ans. d

38. ‘ A written document by which some legal rights are created in favour of some person’

a. Endorsement                        b. Instrument                         c. promissory note                        d. negotiation

Ans. b

39. Incase of dishonor of a bill of exchange _______________________ is compulsory

a. noting                    b. protesting                    c. both noting & protesting                     d. neither noting nor protesting

40. A cheque will become a stalled cheque after _________ months of its date

a. 6                                                b. 5                                                 c.4

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