Question

Which of the following negotiable instrument is drawn, accepted or endorsed without consideration?

• A. Inland bill of exchange
• B. Foreign bill of exchange
• C. Accommodation bill
• D. Promissory note.

Answer 1

Answer: (C)

Accommodation bill

Accommodation bill is a type of Bill of exchange endorsed by a reputable third party called an accommodation party or accommodation endorser acting as a guarantor, as a favor and without compensation. The bill then can be discounted on the financial strength of the guarantor who remains liable until the bill is paid.