Chapter 14

Question 1

Negotiable instruments:

Answer 1

A negotiable instrument means a:
Promissory note, Bill of exchange or, Cheque ( - payable either to order or to bearer.)

Question 2

Delivery:

Answer 2

Transfer of possession, actual or constructive, from one person to another

Question 3

Maker:

Answer 3

The person who makes a promissory note.

Question 4

Payee:

Answer 4

The person named in an instrument, to whom or to whose order money is to be paid

Question 5

Drawer:

Answer 5

The maker of a bill of exchange or cheque.

Question 6

Acceptor:

Answer 6

A bill of exchange (other than a cheque) must be presented to drawee for acceptance first, and then
presented for payment on due date. Drawee becomes acceptor when he accepts the bill duly signing it.

Question 7

Holder:

Answer 7

A person is called holder of a negotiable instrument if he satisfies following two conditions:
- He must be entitled to the possession of the instrument in his own name and
- He must be entitled to receive / recover the amount due on the instrument from the parties liable under the instrument
(So holder means bearer of the bearer instrument and endorsee or payee of the order instrument.)

Question 8

Endorsement:

Answer 8

“When the maker or holder of a negotiable instrument signs the same, otherwise than as such maker, for
the purpose of negotiation on the back or face or on a slip of paper annexed to it thereto, or so signs for the same purpose a
stamped paper intended to be completed as negotiable instrument he is said to endorse the same and is called the
endorser.”

Question 9

Negotiation:

Answer 9

“When a promissory note, bill of exchange or cheque is transferred free from defects to any person, so as to
constitute that person the holder of it, the instrument is said to be negotiated.

Question 10

Promissory note:

Answer 10

“A promissory note is an instrument in writing (not being a bank note or currency note) containing an
unconditional undertaking, signed by the maker, to pay on demand or at a fixed or determinable future time a certain sum of money only, or to the order of a certain person, or to the bearer of the instrument.

Question 11

Bill of exchange:

Answer 11

“A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker,
directing a certain person to pay on demand or at a fixed or determinable future time a certain sum of money only, to or to
the order of, a certain person, or to the bearer of the instrument.”