Site navigation

A direction to pay a specified amount to ‘B’ and not to anyone else is

Question and options

A direction to pay a specified amount to ‘B’ and not to anyone else is
  1. Not a negotiable instrument
  2. A negotiable instrument
  3. A guarantee
  4. A promise

Answer and explanation

Correct answer: A - Not a negotiable instrument
Under Section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument is a promissory note, bill of exchange or cheque payable either to order or to bearer. An instrument payable to a particular person is payable to order only if it does not contain words prohibiting transfer, so a direction to pay B "and not to anyone else" is not negotiable. It is not a guarantee or a promise either, because it is an order to pay, not an undertaking.

Practice for these exams

Related question papers

Related exam syllabi

More solved explanations in Kinds of instruments; holder & holder in due course