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

Consider the statements about instruments made payable to order or to bearer. Statement I: An instrument expressed to be payable to a particular person, without words prohibiting transfer, is payable to order. Statement II: An instrument whose only or last indorsement is an indorsement in blank is payable to bearer.

Both statements are correct. An instrument expressed payable to a particular person, with no words prohibiting transfer, is payable to order, and one whose only or last indorsement is in blank is payable to bearer, as the Act's explanations provide.

  1. AOnly Statement I is correct
  2. BOnly Statement II is correct
  3. CBoth Statements I and II are correctCorrect
  4. DNeither Statement I nor II is correct

Explanation

Under the explanations to the definition of negotiable instrument, an instrument payable to a particular person with no words prohibiting transfer is payable to order. Also, one whose only or last indorsement is in blank is payable to bearer. Both statements therefore follow the Act.

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