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Each person takes possession of a bill of exchange payable to bearer. Who qualifies as a holder in due…

Section 9 of the Negotiable Instruments Act, 1881 requires a person taking a bearer instrument to become its possessor for consideration before the amount becomes payable,…

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Each person takes possession of a bill of exchange payable to bearer. Who qualifies as a holder in due course under the Negotiable Instruments Act, 1881?

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Answer and explanation

Correct answer B

Section 9 of the Negotiable Instruments Act, 1881 requires a person taking a bearer instrument to become its possessor for consideration before the amount becomes payable, without sufficient cause to believe the transferor's title defective.

Possession alone does not establish those conditions.

Option feedback

Option A

Taking it as a gift does not satisfy the requirement of consideration.

Option B

This person takes for consideration, in time, and without sufficient cause to believe the title defective.

Option C

Taking it after it becomes payable fails the timing requirement.

Option D

Sufficient cause to believe the transferor's title defective defeats the statutory test.

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