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

Under the Negotiable Instruments Act, 1881, a negotiable instrument means a promissory note, bill of exchange or cheque payable either:

A negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. This is the definition given in Section 13(1) of the Negotiable Instruments Act, 1881, so payable to order or bearer is the correct choice.

  1. Ato order or to bearerCorrect
  2. Bto the drawer or to the bank
  3. Con demand or after a fixed period only
  4. Dto a named person only

Explanation

The definition in Section 13(1) says a negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. Payable only to a named person with no order/bearer character is not the statutory test, and demand or fixed-period payment is not part of the definition.

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