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As per Section 5 of the Negotiable Instruments Act, 1881, a 'bill of exchange' is an instrument in…

A bill of exchange under section 5 of the Negotiable Instruments Act, 1881 contains an unconditional order to pay. It is in writing, signed by the maker and directs a…

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As per Section 5 of the Negotiable Instruments Act, 1881, a 'bill of exchange' is an instrument in writing containing:

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Correct answer B

A bill of exchange under section 5 of the Negotiable Instruments Act, 1881 contains an unconditional order to pay. It is in writing, signed by the maker and directs a certain person to pay a certain sum of money to a certain person, to that person's order or to the bearer. A promissory note under section 4 contains an unconditional undertaking to pay. Section 5 treats an order or promise as unconditional where the stated time for payment is a specified period after an event certain to happen, even if the event's date is uncertain.

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Option A

A bill of exchange requires an unconditional order. A promissory note requires an unconditional undertaking. Section 5 specifies when a payment term tied to an event certain to happen still counts as unconditional.

Option B

Correct. Under Section 5 of the Negotiable Instruments Act, 1881, a 'bill of exchange' is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

Option C

An unconditional undertaking is part of the section 4 definition of a promissory note. Section 5 requires an order for a bill of exchange.

Option D

Incorrect. An order to pay under Section 5 must be unconditional to constitute a valid bill of exchange.

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