CMA Intermediate · Financial Accounting · Bills of Exchange
Which one of the following is an essential feature of a bill of exchange under the Negotiable Instruments Act, 1881?
A bill of exchange must contain an unconditional order to pay a certain sum of money. It is a written instrument signed by the drawer and directed to the drawee. A conditional promise, payment in goods, or a bank-only drawee is not required.
- AIt must contain an unconditional order to pay a certain sum of moneyCorrect
- BIt must contain a conditional promise by the maker to pay
- CIt must be payable only in goods or services
- DIt must be drawn on a bank and never on any other person
Explanation
A bill of exchange is a written instrument containing an unconditional order, signed by the drawer, directing a certain person to pay a certain sum to a certain person or to the bearer. A conditional promise describes a different instrument, and payment must be in money, not goods. The drawee need not be a bank.
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