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CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881

Which of the following is a presumption available under Section 118 until the contrary is proved?

The presumption that every negotiable instrument was made or drawn for consideration is available under Section 118(a). It stands until the contrary is proved, and similarly covers acceptance, indorsement and transfer. The other options are not presumptions listed in that section.

  1. AThat every negotiable instrument was made or drawn for considerationCorrect
  2. BThat every negotiable instrument was made in India
  3. CThat every drawee will accept the bill on presentment
  4. DThat every instrument is payable on demand

Explanation

Section 118(a) presumes that every negotiable instrument was made or drawn for consideration, and also that every acceptance, indorsement or transfer was for consideration. The Act contains no presumption about place of making or the drawee's acceptance. Payable on demand is a rule in Section 19 for instruments with no time specified, not a presumption.

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