Question

Classification of Negotiable Instruments
When one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein, and not exceeding the amount, covered by the stamp.
Such instrument is called an-.

• A. Inchoate or Incomplete instrument
• B. Ambiguous instrument
• C. Order instrument
• D. Inland instrument

Answer 1

The correct option is A Inchoate or Incomplete instrument

Inchoate instrument means an unregistered, unrecorded instrument that becomes effective to third parties only when the instrument is recorded. When you sign an unfilled or an incomplete negotiable instrument such as a cheque or a promissory note and negotiate them just like any other negotiable instrument, it is called an inchoate instrument. As per section 20 of the act, when one person signs and delivers to another a paper stamped in accordance with the law relating to negotiable instruments, and either wholly blank or having written thereon an incomplete negotiable instrument, he thereby gives prima facie authority to the holder thereof to make or complete, as the case may be, upon it a negotiable instrument, for any amount specified therein, and not exceeding the amount, covered by the stamp, such instrument is called an inchoate instrument.