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CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881

Under the Negotiable Instruments Act, 1881, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on:

A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Instruments payable after a period, on an event or on acceptance fall outside this definition, so demand is the correct answer.

  1. ADemandCorrect
  2. BA date thirty days after issue
  3. CThe happening of a stated event
  4. DAcceptance by the holder

Explanation

Section 6 defines a cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. A cheque payable after a fixed period or on an event would be payable otherwise than on demand, so those options fail.

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