CA Foundation · Accounting · Bills of Exchange and Promissory Notes
A bill of ₹30,000 payable 'on demand' is presented. Which statement about days of grace is correct under the Negotiable Instruments Act, 1881?
No days of grace are allowed for an instrument payable on demand or at sight. Such an instrument is due as soon as it is presented for payment. Grace days of three apply only to bills payable after a fixed period or after sight.
- AThree days of grace are allowed after presentment
- BNo days of grace are allowed for an instrument payable on demand or at sightCorrect
- COne day of grace is allowed
- DThree days of grace are allowed only if the drawee requests
Explanation
Grace days apply only to instruments payable after a fixed period or after sight. An instrument payable on demand or at sight is due on presentment, so no grace is given. The option of three days wrongly applies the term-bill rule to a demand instrument.
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