What is the primary purpose of the Negotiable Instruments Act, 1881?

To legalize instruments like promissory notes, bills of exchange, and cheques, facilitating their transfer and use in commercial transactions.

Fill in the blank: A bill of exchange must contain an express order to pay and be ___ and ___ in its terms.

Definite, unconditional

True or False: A cheque can be issued in electronic form and is recognized under the Information Technology Act, 2000.

True

What is an inchoate instrument, and what liability does the signer have when such an instrument is delivered?

An inchoate instrument is incomplete.

• Incomplete negotiable instrument.

• Liable to both holder types.

• Recovery limited to intended amount.

In the context of negotiable instruments, what does 'payable to bearer' mean?

'Payable to bearer' means that the instrument can be transferred simply by delivery, without requiring endorsement.

Explain the concept of 'dishonour of a cheque' under Section 138.

Dishonour of a cheque is significant.

• Occurs due to insufficient funds.

• Legal consequences for drawer exist.

• Section 138 outlines penalties.

Fill in the blank: For a promissory note to be valid, it must include an unconditional promise to pay ___ only.

Money

True or False: An endorsement is not required for the negotiation of an order instrument.

False: An endorsement is required for the negotiation of an order instrument.

What is the significance of delivery in the negotiation of negotiable instruments?

Delivery is essential as it signifies the intention to transfer ownership of the instrument; without delivery, the negotiation is incomplete.

What differentiates inland instruments from foreign instruments?

Inland instruments are those drawn in India and payable in India, while foreign instruments are drawn outside India or payable outside India.