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

Ravi signs a paper stating: "I promise to pay Meena or order Rs. 5,000." Which of the following is the correct legal position under the Negotiable Instruments Act, 1881?

It is a promissory note. It is a written instrument with an unconditional undertaking signed by the maker to pay a certain sum, Rs. 5,000, to a certain person or her order. Words like 'value received' or a stated date are not required by the definition.

  1. AIt is a promissory note, because it contains an unconditional undertaking signed by the maker to pay a certain sum to a certain person or to her orderCorrect
  2. BIt is not a promissory note, because the words 'for value received' are missing
  3. CIt is not a promissory note, because it does not mention a date of payment
  4. DIt is not a promissory note, because it is not addressed to a bank

Explanation

A promissory note is an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person. Ravi's writing meets every element. Option B and C add requirements that the definition does not impose, and a note need not be addressed to a bank, which is a feature of a cheque.

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