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Complete resources on Negotiable Instruments Act
Complete resources on Presentment of Negotiable Instrument – MCQ
Presentment of Negotiable Instrument – MCQ
1. In case of delay in presentment for payment of a promissory note, which party of the following is discharged?
(a) the maker of the note
(b) the indorser
(c) Both (a) and (b)
(d) None of the above.
Intent: To test understanding of liability discharge due to delay in presentment of a promissory note.
Options Analysis:
(a) The maker of the note – Incorrect.
The maker of a promissory note is primarily liable and remains liable even if there is a delay in presentment.
Inference: Incorrect. The maker is not discharged due to late presentment.
(b) The indorser – Correct.
As per Section 64 of the Negotiable Instruments Act, 1881, if a note is not presented within a reasonable time, the indorser is discharged from liability.
The rationale is that an indorser guarantees payment only if proper presentment is made.
Inference: Correct. The indorser is discharged due to delayed presentment.
(c) Both (a) and (b) – Incorrect.
While the indorser is discharged, the maker remains liable.
Inference: Incorrect. The maker is not discharged.
(d) None of the above – Incorrect.
Since (b) is correct, this option is wrong.
Inference: Incorrect. The indorser is discharged.
Correct Answer: (b) The indorser
Logical Deliberation:
- A promissory note must be presented within a reasonable time to hold endorsers liable.
- If delayed, the indorser is discharged, but the maker remains liable.
Ans. If the indorsee defaults to present a promissory note within a reasonable time, the indorser will be discharged from his liability. Hence, option (b) is the correct answer.
2. Which of the following parties or party is discharged in case of non-presentment of an instrument where the presentment is obligatory?
(a) the drawer
(b) the indorsers
(c) Both (a) and (b)
(d) none of the above.
Intent: To check which parties are discharged if an instrument is not presented where required by law.
Options Analysis:
(a) The drawer – Correct.
The drawer of a bill of exchange or cheque is discharged if the holder fails to present it within a reasonable time.
Inference: Correct. The drawer is discharged.
(b) The indorsers – Correct.
Indorsers are also discharged if the instrument is not presented properly when required.
Inference: Correct. Indorsers are discharged.
(c) Both (a) and (b) – Correct.
Since both drawer and indorsers are discharged, this is the best answer.
Inference: Correct. Both are discharged if presentment is required but not done.
(d) None of the above – Incorrect.
Since (c) is correct, this option is wrong.
Inference: Incorrect. The drawer and indorsers are discharged.
Correct Answer: (c) Both (a) and (b)
Logical Deliberation: Non-presentment of an instrument where required discharges both the drawer and indorsers from liability.
Ans. Ifan Instrument is not presented where the presentment is obligatory, the drawer and all the indorsers are discharged from liability to him. Hence, option (c) is the correct answer.
3. A promissory note is presented for payment after seven days of its maturity.
(a) The indorser is discharged on the note
(b) The indorser is not discharged on the note
(c) The maker is discharged on the note
(d) None of the above.
Intent: To determine who is discharged when a promissory note is presented late.
Options Analysis:
(a) The indorser is discharged on the note – Correct.
The indorser is discharged if the note is not presented within a reasonable time after maturity.
Inference: Correct. The indorser is released from liability.
(b) The indorser is not discharged on the note – Incorrect.
Section 64 of the Negotiable Instruments Act clearly states that delay in presentment discharges the indorser.
Inference: Incorrect. The indorser is discharged due to delay.
(c) The maker is discharged on the note – Incorrect.
The maker remains liable even if there is a delay in presentment.
Inference: Incorrect. The maker’s liability is not affected.
(d) None of the above – Incorrect.
Since (a) is correct, this option is incorrect.
Inference: Incorrect. The indorser is discharged.
Correct Answer: a) The indorser is discharged on the note
Logical Deliberation: Delayed presentment discharges indorsers but does not discharge the maker.
Ans. Ifan Instrument is not presented where the presentment is obligatory, the drawer and all the indorsers are discharged from liability to him. So, if a promissory note is presented for payment after seven days of its maturity, the indorser is discharged on the note. Hence, option (a) is the correct answer.
4. Presentment for sight is essential for:
(a) Bill of exchange
(b) Promissory Note
(c) Cheque
(d) All Negotiable Instruments.
Intent: To check knowledge of which instruments require presentment for sight before they are payable.
Options Analysis:
(a) Bill of exchange – Correct.
Bills of exchange payable at sight must be presented to the drawee before payment can be demanded.
Inference: Correct. Bills of exchange require presentment for sight.
(a) Promissory Note – Incorrect.
Promissory notes do not require presentment for sight, as they are unconditional promises to pay.
Inference: Incorrect. Presentment is not needed for promissory notes.
(b) Cheque – Incorrect.
A cheque is payable on demand, meaning it does not require presentment for sight.
Inference: Incorrect. Cheques do not need presentment for sight.
(c) All Negotiable Instruments – Incorrect.
Since promissory notes and cheques do not require presentment for sight, this option is incorrect.
Inference: Incorrect. Not all negotiable instruments require presentment for sight.
Correct Answer: (a) Bill of exchange
Logical Deliberation:
- A bill of exchange requires presentment for sight before it can be accepted and paid.
Ans. Presentment for sight is not applicable to Promissory Note and Cheque, but essentila for Bill of Exchange, Hence, option (a) is the correct answer.
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