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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Anita Sharma, a trader in Pune, signs a written promise: 'I promise to pay Ravi Kulkarni or order Rs 50,000 on demand.' Anita is the person who signed and made the promise. Under the Negotiable Instruments Act, 1881, what is Anita's position in relation to this instrument?

Anita is the maker. A promissory note is an unconditional written promise to pay a fixed sum, and the person who signs it and makes that promise is called the maker. Drawer and drawee belong to bills of exchange and cheques, so they do not apply here.

  1. ADrawer
  2. BMakerCorrect
  3. CDrawee
  4. DEndorsee

Explanation

The instrument is a promissory note because it contains an unconditional promise to pay a certain sum. The person who signs and promises to pay is called the maker. A drawer and a drawee exist only in bills of exchange and cheques, and an endorsee is a person to whom the instrument is later endorsed.

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