Skip to content

CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

Ravi Menon signs a promissory note form that is properly stamped but leaves the amount and payee blank, and hands it to Suresh. Under the Negotiable Instruments Act, 1881, what authority does Ravi thereby give Suresh?

Ravi gives Suresh prima facie authority to complete the instrument for any amount, but not more than the amount covered by the stamp. The law treats the signed stamped paper as an inchoate instrument, and the stamp value sets the ceiling.

  1. APrima facie authority to complete a negotiable instrument for any amount not exceeding the amount covered by the stampCorrect
  2. BAuthority to complete it for any amount whatsoever, regardless of the stamp
  3. CNo authority, because an incomplete paper can never become a negotiable instrument
  4. DAuthority to complete it only if Ravi later ratifies the amount in writing

Explanation

Section 20 gives the holder of a signed, stamped, blank or incomplete instrument prima facie authority to complete it for any amount specified, up to the amount covered by the stamp. The stamp value is the ceiling, so an unlimited authority is wrong. Later ratification is not required.

Did you get it right without looking?

One question tells you little. A timed set on Law relating to Negotiable Instruments shows your real accuracy, how long you take and where you lose marks.

Practise Law relating to Negotiable InstrumentsFree diagnostic mock

More Law relating to Negotiable Instruments questions