CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
Under the Negotiable Instruments Act, 1881, which one of the following is a negotiable instrument as defined in the Act, when payable to order or to bearer?
A cheque is a negotiable instrument under the Act. Section 13 says a negotiable instrument means a promissory note, bill of exchange or cheque payable to order or to bearer. The other documents listed are not within this statutory definition.
- AA share certificate of a company
- BA bill of lading
- CA chequeCorrect
- DA railway receipt
Explanation
Section 13 defines a negotiable instrument as a promissory note, bill of exchange or cheque payable either to order or to bearer. Share certificates, bills of lading and railway receipts are documents of title or other papers, not negotiable instruments under the Act, so they are wrong.
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