CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
Under the Negotiable Instruments Act, 1881, until the contrary is proved, which of the following is presumed about the holder of a negotiable instrument?
Until the contrary is proved, the law presumes that the holder of a negotiable instrument is a holder in due course. The burden shifts to the holder only if the instrument was obtained by an offence, fraud or for unlawful consideration.
- AThat the holder is a holder in due courseCorrect
- BThat the holder is the original payee
- CThat the holder gave no consideration
- DThat the holder is the drawer
Explanation
Section 118(g) presumes that the holder of a negotiable instrument is a holder in due course, until the contrary is proved. The proviso shifts the burden onto the holder only where the instrument was obtained by an offence, fraud or unlawful consideration.
Did you get it right without looking?
One question tells you little. A timed set on Negotiable Instruments Act, 1881 shows your real accuracy, how long you take and where you lose marks.
More Negotiable Instruments Act, 1881 questions
- Ananya Traders receives an uncrossed cheque drawn by a customer. Under the Negotiable Instruments Act, 1881, what may the holder of this unc…
- B holds a bearer instrument and signs an indorsement reading 'Pay C only'. Which statement is correct under Section 50?
- A cheque issued to Meenakshi Exports is crossed specially to HDFC Bank. Which step may HDFC Bank take under the Act?
- Meera Traders issues a cheque to Kiran Suppliers. The cheque is dishonoured by the drawee bank. Under Section 30, the drawer's liability to …
- A promissory note states the maker will pay Rs. 10,000 to Vikram but specifies no time for payment. Under the Negotiable Instruments Act, 18…
- Rohit receives a cheque crossed generally with two parallel transverse lines. He writes the name of 'State Bank of India' between the lines.…