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

Statement I: An instrument expressed to be payable to a particular person is payable to order if it contains no words prohibiting transfer or indicating an intention that it shall not be transferable. Statement II: An instrument on which the only or last indorsement is an indorsement in blank is payable to bearer. Which is correct?

Both statements are correct. Under Section 13, an instrument payable to a particular person with no words prohibiting transfer is payable to order, and one whose only or last indorsement is in blank is payable to bearer.

  1. AOnly Statement I is correct
  2. BOnly Statement II is correct
  3. CBoth Statements are correctCorrect
  4. DNeither Statement is correct

Explanation

Explanation (i) to Section 13 says an instrument payable to a particular person, without words prohibiting transfer, is payable to order. Explanation (ii) says an instrument whose only or last indorsement is in blank is payable to bearer. Both statements match the Act.

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