Assume each writing is signed by its maker. Which wording lacks the undertaking to pay required for a promissory note under section 4?
Question and options
Assume each writing is signed by its maker. Which wording lacks the undertaking to pay required for a promissory note under section 4?
I promise to pay Maya or order ₹500
I acknowledge a debt to Maya of ₹1,000, to be paid on demand for value received
Maya, I.O.U. ₹1,000
I promise to pay Maya ₹1,000 on demand
Answer and explanation
Section 4 of the Negotiable Instruments Act, 1881 requires an unconditional undertaking to pay, and its illustrations show that "Mr B, I.O.U. Rs 1,000" is a mere acknowledgment of debt, not a promissory note. By contrast, an acknowledgment of debt that adds "to be paid on demand, for value received" contains an undertaking to pay and is a promissory note, as are the two plain promises to pay.
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