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CMA Intermediate · Business Laws and Ethics · Negotiable Instruments Act, 1881

In determining what is a reasonable time for giving notice of dishonour and for noting, which approach does the Act prescribe?

Reasonable time depends on the nature of the instrument and the usual course of dealing with similar instruments, and public holidays are excluded when calculating it. The Act fixes no set number of hours, and distance or amount alone is not the test.

  1. ARegard the nature of the instrument and the usual course of dealing for similar instruments, excluding public holidaysCorrect
  2. BFix the time at exactly 24 hours from dishonour, including public holidays
  3. CRegard only the distance between the holder and the drawer, counting public holidays
  4. DRegard only the amount of the instrument, with public holidays included

Explanation

Section 105 directs that regard be had to the nature of the instrument and the usual course of dealing with similar instruments, and that public holidays be excluded in calculating the time. It sets no fixed hours. The options counting public holidays or using only distance or amount contradict this.

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