Which item falls outside the meaning of a bill of exchange under the Negotiable Instruments Act, 1881?
Section 5 of the Negotiable Instruments Act, 1881 defines a bill of exchange as an unconditional written order directing payment of a certain sum of money. A company share…
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Which item falls outside the meaning of a bill of exchange under the Negotiable Instruments Act, 1881?
Answer and explanation
Correct answer A
Section 5 of the Negotiable Instruments Act, 1881 defines a bill of exchange as an unconditional written order directing payment of a certain sum of money. A company share is an ownership interest. A bank demand draft is a payment order. A post-dated cheque is a bill of exchange before its date, and section 6 classifies a cheque as a type of bill of exchange.
Option feedback
Option A
A company share represents an interest in the company and contains no payment order of the kind required by section 5.
Option B
A bank branch demand draft drawn on another branch is a payment order.
Option C
A post-dated cheque is a bill of exchange before it becomes payable on demand on the date it bears.
Option D
Section 6 defines a cheque as a bill of exchange drawn on a specified banker and payable on demand.
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