CMA Intermediate · Business Laws and Ethics · Negotiable Instruments Act, 1881
Under the Negotiable Instruments Act, 1881, a promissory note payable to order is negotiated by the holder through which of the following methods?
An instrument payable to order is negotiated by the holder through indorsement and delivery. Indorsement alone or delivery alone is not enough for an order instrument, and no assignment deed or notice to the maker is required under the Act.
- AIndorsement and deliveryCorrect
- BDelivery alone without any indorsement
- CRegistered assignment deed with notice to the maker
- DWritten intimation to the maker with consent of the drawee
Explanation
Section 48 provides that a promissory note, bill of exchange or cheque payable to order is negotiable by the holder by indorsement and delivery. Delivery alone suffices only for bearer instruments, and an assignment deed with notice is not the statutory mode of negotiation.
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