Question

Introduction
The Negotiable Instruments Act, 1881 define and amend the law relating to -.
(I) Promissory notes
(II) Bills of exchange
(III) Cheques
(IV) Hundi
Select the correct answer from the options given below-

• A. (I) only
• B. (I) and (II) only
• C. (I) to (IV) only
• D. (I) to (III) only

Answer 1

The correct option is D (I) to (III) only

• Under section 4 of the NI Act, 1881, “Promissory note”.—A “promissory note” is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.
  
• As per section 5, “bill of exchange” is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument. A promise or order to pay is not “conditional”, within the meaning of this section.
  
• Section 6 defines cheque as a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand and it includes the electronic image of a truncated cheque and a cheque in the electronic form.

All these forms of negotiable instruments are governed under the Negotiable Instruments Act, 1881.