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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

A promissory note made and indorsed in Mumbai is made payable in a different place, Dubai. Under the Negotiable Instruments Act, 1881, which law decides what constitutes dishonour of the note and what notice of dishonour is sufficient?

The law of the place where the instrument is made payable, here Dubai, governs. The Act provides that when an instrument is payable at a different place from where it is made or indorsed, that place's law determines dishonour and sufficiency of notice.

  1. AThe law of the place where it is made payableCorrect
  2. BThe law of the place where it was made
  3. CThe law of the place where it was last indorsed
  4. DThe law of the place where the holder resides

Explanation

Where a promissory note, bill of exchange or cheque is payable in a different place from where it is made or indorsed, the law of the place where it is made payable determines what constitutes dishonour and what notice is sufficient. Mumbai, being the place of making and indorsement, is therefore not the governing law here.

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