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

Consider these statements about Section 20 of the Negotiable Instruments Act, 1881. I. The paper must be stamped in accordance with the law relating to negotiable instruments in force in India. II. The paper may be wholly blank or have an incomplete negotiable instrument written on it. III. The holder may complete the instrument for an amount exceeding the amount covered by the stamp if the signer later consents orally. Which statements are correct?

Only statements I and II are correct. Section 20 applies to a properly stamped paper that is wholly blank or carries an incomplete instrument. The holder's authority cannot exceed the amount covered by the stamp, and the section gives no oral-consent exception.

  1. AI, II and III
  2. BII and III only
  3. CI and II onlyCorrect
  4. DI only

Explanation

Section 20 requires a paper stamped according to the law in force in India, and it may be wholly blank or have an incomplete instrument. The authority extends only to an amount not exceeding the amount covered by the stamp, and the section provides no oral-consent extension, so statement III is wrong.

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