CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
Ramesh signs a written instrument stating: "I promise to pay Suresh or order Rs. 5,000." Under the Negotiable Instruments Act, 1881, this instrument is:
It is a promissory note. It is in writing, contains an unconditional promise signed by the maker to pay a certain sum to a certain person or his order. Where no time is stated, it is simply payable on demand.
- AA promissory noteCorrect
- BA bill of exchange
- CA cheque
- DNot a negotiable instrument because no time for payment is stated
Explanation
Section 4 defines a promissory note as a written instrument with an unconditional undertaking, signed by the maker, to pay a certain sum to a certain person or his order. The instrument meets all these requirements. The absence of a stated time does not matter, since under Section 19 such a note is payable on demand.
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