CA Foundation Exam > CA Foundation Videos > Crash Course for CA Foundation > The Negotiable Instruments Act, 1881 - 2
The Negotiable Instruments Act, 1881 - 2 Video Lecture | Crash Course for CA Foundation
FAQs on The Negotiable Instruments Act, 1881 - 2 Video Lecture - Crash Course for CA Foundation
| 1. What are negotiable instruments and why are they important in commerce? |  |
Ans.Negotiable instruments are written documents that guarantee the payment of a specific amount of money, either on demand or at a set time. They include instruments like checks, promissory notes, and bills of exchange. They are important in commerce because they facilitate trade and credit transactions by providing a secure and transferable means of payment, thus enhancing liquidity and trust in financial dealings.
| 2. What are the different types of negotiable instruments? | |
Ans.The different types of negotiable instruments include promissory notes, bills of exchange, checks, certificates of deposit, and bearer bonds. Each type serves a specific purpose in financial transactions, allowing parties to transfer money and credit efficiently.
| 3. What are the essential characteristics of negotiable instruments? | |
Ans.The essential characteristics of negotiable instruments include: 1) Transferability – they can be transferred from one person to another; 2) Unconditionality – they must contain an unconditional promise or order to pay; 3) Certainty of amount – the amount to be paid must be definite; 4) Signatures – they must be signed by the maker or drawer; and 5) Date – they generally need to specify a date for payment.
| 4. How does one endorse a negotiable instrument? | |
Ans.Endorsement of a negotiable instrument involves signing the back of the instrument or attaching a separate piece of paper (endorsement). The endorser must sign their name, which can then allow the instrument to be transferred to another party. There are different types of endorsements, including blank endorsement, special endorsement, and restrictive endorsement, each serving different purposes in the transfer process.
| 5. What rights do holders of negotiable instruments have? | |
Ans.Holders of negotiable instruments have specific rights, including the right to receive payment as specified in the instrument, the right to transfer the instrument to another party, and the right to enforce payment against the parties liable on the instrument. Holders in due course also enjoy additional protections, such as immunity from certain defenses that could be raised against prior holders.
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