Negotiable Instruments- 2 - Free MCQ Practice Test with solutions, B Com

An instrument is considered an inland instrument if it is made or drawn in India and payable in India, or if it is drawn upon a person resident in India, even if payment is to be made outside of India. In this case, a cheque drawn in India and made payable in India satisfies the criteria for an inland instrument.

Usance refers to the time fixed for the payment of bills drawn in one country and made payable in another. The length of usance can vary from country to country.

A restrictive endorsement is one that restricts or prohibits further negotiation of a negotiable instrument. It may include specific instructions such as "Pay to Mr. X only." This type of endorsement limits the transferability of the instrument.

An instrument marked "payable on demand" implies that the payment is to be made immediately or at once upon demand. This includes instruments such as cheques, as well as promissory notes or bills of exchange marked as "payable on demand" or "payable on presentment."

A blank but stamped instrument is referred to as an inchoate instrument. It is a paper that has been signed and delivered to another person, but is either completely blank or has an incomplete negotiable instrument written on it. The holder of the instrument is given authority to make or complete it as a negotiable instrument for any amount specified, as long as it does not exceed the amount covered by the stamp.

An instrument is considered a foreign instrument if it is not an inland instrument. This includes a promissory note made in India but payable outside India, a promissory note made outside India and payable outside India, and a bill drawn in India on a person residing outside India and accepted payable outside India.

An instrument that is written in such a manner that it can be treated as a bill or a note is referred to as an ambiguous instrument. It may not clearly indicate whether it is a promissory note or a bill of exchange, leaving it up to the holder to choose how to treat it.

A blank endorsement occurs when the endorser signs his name only, without specifying any particular person as the payee. This makes the instrument payable to bearer, meaning it can be transferred by mere possession.

An instrument can be treated as both a bill of exchange and a promissory note when the drawer and the drawee are the same persons. This situation allows the holder of the instrument to choose whether to treat it as a bill or a note. For example, if the drawer and drawee are the same fictitious person, the holder may treat the instrument as a note.

The three copies of a foreign bill that are sent by different mails to ensure delivery are called "via." This practice is followed to increase the chances of at least one copy of the bill reaching the acceptor, as there is a greater risk of loss during transit over long distances.