Commerce · Class 12 Commerce
Ch 22The Negotiable Instruments Act, 1881 — Class 12 Commerce, concept-first.
Trade and commerce, whether in Chennai, Coimbatore or anywhere else in the country, run on credit as much as on cash. A supplier who ships goods today may only be paid weeks later; a trader may want to raise short-term funds against money that is due to them.
Key concepts
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Meaning and Characteristics of Negotiable Instruments
A negotiable instrument is a written document representing a right to a fixed sum of money that can be transferred from person to person almost as freely as cash, while carrying its own legal protections for an honest tr…
Most relevant Q&A
- Under Section 13 of the Negotiable Instruments Act, 1881, a negotiable instrument is a promissory note, bill of exchange or cheque payable e…Free
- Define a Negotiable Instrument. State any four features of a negotiable instrument.Free
- Specify the document which comes under the Negotiable Instruments Act: (a) Stock (b) Share Certificate (c) Share (d) Share WarrantPreview
- Negotiable Instrument is : (a) Transferable (b) Title of the holder is free from all defects (c) (a) and (b) are correct (d) (a) and (b) are…Preview
- Distinguish between Negotiability and Assignability. (Any 3)Preview
Chapter contents
The NCERT structure, section by section. Open a section to see its questions, then read the concept-first solution.
Meaning, Definition and Features of Negotiable Instruments
Trade and commerce, whether in Chennai, Coimbatore or anywhere else in the country, run on credit as much as on cash.
Promissory Note
A promissory note is the simplest of the three negotiable instruments because it involves only two parties and a single, direct promise.
Bill of Exchange
A bill of exchange differs from a promissory note in one crucial respect: instead of one person promising to pay, one person orders another person to pay a third person (or the same person who gave th…
Cheque: Meaning and Types
A cheque is the negotiable instrument students encounter most often in everyday life, and the Act treats it as a special, restricted category of bill of exchange.
Crossing of Cheques
Crossing is a unique safety feature available only for cheques (a promissory note or an ordinary bill of exchange cannot be crossed).
Holder and Holder in Due Course
Every negotiable instrument passes through the hands of one or more people before it is finally paid, and the Act carefully distinguishes between simply holding an instrument and holding it under cond…
Endorsement: Meaning, Essentials and Kinds
Endorsement is the mechanism by which an order instrument (payable to a named person or their order) is actually transferred from one person to another.
Maturity and Days of Grace
'Maturity' is simply the date on which a negotiable instrument becomes due for payment. For an instrument payable on demand (like a cheque), maturity is effectively whenever it is presented.
Dishonour of Cheque, Noting, Protest and Section 138
A negotiable instrument is said to be 'dishonoured' when the party liable to pay it fails to do so — either by refusing to accept it in the first place (dishonour by non-acceptance, relevant to bills…
Sample & Board Papers
Sample papers and previous-year board questions for this subject.
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- Q1Section 123 of the Negotiable Instruments Act, 1881 deals with: (a) General Crossing (b) Promissory note (c) Special Crossing (d) Bill of Ex…Preview
- Q2Specify the document which comes under the Negotiable Instruments Act: (a) Stock (b) Share Certificate (c) Share (d) Share WarrantPreview
- Q3If the payee is an illiterate, how can he endorse a negotiable instrument?Preview
- Q4When there is no space in Negotiable Instrument for making further endorsement, how can it be endorsed?Preview
- Q5Negotiable Instrument is : (a) Transferable (b) Title of the holder is free from all defects (c) (a) and (b) are correct (d) (a) and (b) are…Preview
- Q6Number of parties in a Bill of Exchange are: (a) 3 (b) 2 (c) 4 (d) 6Preview
- Q7Distinguish between Negotiability and Assignability. (Any 3)Preview
- Q8(a) Explain the features of a Cheque. OR (b) Explain the purpose of Training.Preview
- Q9A Cheque will become stale after ______ months. (a) 5 (b) 3 (c) 7 (d) 4Preview
- Q10What are the characteristics of a Bill of Exchange ? (any 3)Preview
- Q11(a) Distinguish a Cheque and a Bill of Exchange. (any 5) OR (b) Discuss the characteristics of a Capital Market.Preview
- Q12Write any three presumptions to Negotiable Instruments.Preview
- Q13Section '6' of Negotiable Instruments Act 1881 deals with : (a) Bills of Exchange (b) Cheque (c) Promissory Note (d) None of the abovePreview
More questions
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- Q3Define a Negotiable Instrument. State any four features of a negotiable instrument.Free
- Q4Define Promissory Note under Section 4 of the Negotiable Instruments Act, 1881. Name the parties to a promissory note.Free
- Q6What is a Cheque? How is it different from an ordinary Bill of Exchange?Preview
- Q8Who is a 'Holder in Due Course' under Section 9 of the Negotiable Instruments Act, 1881? State the conditions to be satisfied.Preview