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

Which of the following instruments, signed by Kiran, is a promissory note under the Negotiable Instruments Act, 1881?

The acknowledgment of indebtedness of Rs. 1,000 to be paid on demand for value received is a promissory note. It contains an unconditional undertaking to pay a certain sum to a certain person. The other instruments are a bare I O U, a conditional promise, and a promise including a non-money obligation.

  1. A"Mr. Bhaskar, I O U Rs. 1,000."
  2. B"I promise to pay Bhaskar Rs. 500 seven days after my marriage with Chitra."
  3. C"I acknowledge myself to be indebted to Bhaskar in Rs. 1,000, to be paid on demand, for value received."Correct
  4. D"I promise to pay Bhaskar Rs. 500 and to deliver to him my black horse on 1st January next."

Explanation

An acknowledgment of debt that also contains a promise to pay a certain sum on demand is a promissory note, as in the Act's illustration. A bare I O U has no undertaking to pay. The marriage-linked payment is conditional, and the horse delivery adds an obligation other than money.

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