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CMA Intermediate · Business Laws and Ethics · Negotiable Instruments Act, 1881

Which statement about the protest of foreign bills of exchange is correct under the Negotiable Instruments Act, 1881?

A foreign bill must be protested for dishonour only when the law of the place where it is drawn requires such protest. The requirement depends on the law of the place of drawing, not on a blanket Indian rule or on the drawee's residence.

  1. AForeign bills must be protested for dishonour when the law of the place where they are drawn requires such protestCorrect
  2. BForeign bills must always be protested for dishonour under Indian law, whatever the foreign law says
  3. CForeign bills need never be protested because protest applies only to inland bills
  4. DForeign bills must be protested only if the drawee is resident outside India

Explanation

Section 104 says foreign bills must be protested for dishonour when the law of the place where they are drawn requires it. So the foreign law of the place of drawing governs the requirement, not a blanket Indian rule. Saying protest is never needed ignores this provision.

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