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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Which of the following is a feature distinguishing a cheque from other bills of exchange under the Negotiable Instruments Act, 1881?

A cheque is a special bill of exchange drawn on a specified banker and payable only on demand. Unlike an ordinary bill, it needs no acceptance, cannot be payable after a period, and cannot be drawn on a non-banker.

  1. AA cheque is drawn on a specified banker and is payable on demandCorrect
  2. BA cheque must always be accepted by the drawee before payment
  3. CA cheque may be payable after a fixed period after sight
  4. DA cheque can be drawn on any person, including a trader, if it is signed

Explanation

A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand. Acceptance is not required for a cheque, and it cannot be made payable after a period. It cannot be drawn on a trader. Hence only option 1 is correct.

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