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CS Executive · Jurisprudence, Interpretation and General Laws · Law relating to Negotiable Instruments

Which statement correctly reflects a presumption that the Act makes about a negotiable instrument until the contrary is proved?

Until the contrary is proved, the Act presumes that every negotiable instrument was made or drawn for consideration, and also that each later acceptance, indorsement or transfer was for consideration. The holder is likewise presumed to be a holder in due course, not required to prove it.

  1. AEvery negotiable instrument was made or drawn for considerationCorrect
  2. BEvery negotiable instrument was made by a person of full age and sound mind
  3. CEvery holder must prove that he is a holder in due course
  4. DEvery instrument was made in the place it names as its drawing place

Explanation

Section 118(a) presumes that every negotiable instrument was made or drawn for consideration, and likewise for each acceptance, indorsement or transfer. Section 118(g) presumes the holder is a holder in due course, so the option saying he must prove it is wrong. The other options are not among the listed presumptions.

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