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

Consider the statements about payment time of instruments: (1) A promissory note in which no time for payment is specified is payable on demand. (2) A bill of exchange in which no time for payment is specified is payable on demand. (3) A cheque is payable on demand. Which is correct?

All three statements are correct. A promissory note or bill of exchange with no time for payment specified is payable on demand, and a cheque is always payable on demand under the Negotiable Instruments Act, 1881.

  1. AStatements 1, 2 and 3 are all correctCorrect
  2. BOnly statements 1 and 3 are correct
  3. COnly statements 2 and 3 are correct
  4. DOnly statement 3 is correct

Explanation

The Act provides that a promissory note or bill of exchange in which no time for payment is specified, and a cheque, are payable on demand. Hence all three statements are correct. Options B, C and D wrongly exclude a bill or a note with no time specified.

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