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

Ravi signs the following document in favour of Meena: "I promise to pay Meena Rs. 5,000 and all other sums which shall be due to her." Under the Negotiable Instruments Act, 1881, this document is:

The document is not a promissory note because the amount payable is not certain. A promissory note must carry an unconditional undertaking to pay a certain sum of money only, and the addition of all other sums due makes the sum indefinite.

  1. ANot a promissory note, because the sum to be paid is not certainCorrect
  2. BA valid promissory note, because it is in writing and signed by Ravi
  3. CA valid promissory note, but only if it is stamped
  4. DA bill of exchange, because it names Meena as payee

Explanation

A promissory note must contain an unconditional undertaking to pay a certain sum of money only. The words "and all other sums which shall be due to her" make the amount uncertain, so the instrument is not a promissory note. Option B ignores the requirement of a certain sum.

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