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A person signs and delivers a duly stamped but incomplete promissory note. What authority does section…

Section 20 gives prima facie authority to complete a signed and delivered, duly stamped, incomplete instrument up to the amount covered by the stamp. A holder other than a…

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A person signs and delivers a duly stamped but incomplete promissory note. What authority does section 20 of the Negotiable Instruments Act, 1881 give the holder?

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Answer and explanation

Correct answer C

Section 20 gives prima facie authority to complete a signed and delivered, duly stamped, incomplete instrument up to the amount covered by the stamp. A holder other than a holder in due course cannot recover from the signer beyond the amount the signer intended to be paid.

Option feedback

Option A

Delivery of the signed, stamped incomplete instrument carries prima facie completion authority.

Option B

Section 20 limits the amount to what the stamp covers.

Option C

Section 20 provides this prima facie authority. As against someone other than a holder in due course, liability cannot exceed the amount the signer intended to be paid under the instrument.

Option D

Section 20 concerns an inchoate instrument. Section 87 generally makes unauthorized material alteration void against a pre-existing nonconsenting party, subject to its exceptions.

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