Bill of Exchange Process Quiz
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Questions and Answers

What is the primary liability of the drawee after accepting a bill of exchange?

  • To negotiate the bill with the payee
  • To return the bill to the drawer for further instructions
  • To endorse the bill to a third party
  • To pay the amount mentioned in the bill unconditionally (correct)

    • Which of the following is an essential characteristic of a bill of exchange?

  • Must be payable to bearer on demand
  • Should not contain a definite order to pay
  • Should be verbally agreed upon instead of in writing
  • Must contain an express order to pay (correct)

    • Can a bill of exchange be made payable to 'bearer on demand' as per Section 31 of RBI Act, 1934?

  • No, it is invalid (correct)
  • Valid only if the order is to pay money and goods
  • Yes, it is valid
  • Only valid if the sum is certain

    • Who is responsible for signing a bill of exchange?

    <p>Drawer</p> Signup and view all the answers

    What happens if one person plays the role of both drawer and payee in a bill of exchange?

    <p>The bill will be considered invalid</p> Signup and view all the answers

    What is the main difference between an invalid and a valid bill of exchange?

    <p>Valid bills must contain an express order to pay, while invalid ones do not</p> Signup and view all the answers

    What is the essential characteristic of a bill of exchange that distinguishes it from a promissory note?

    <p>It is an unconditional order to pay.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a bill of exchange?

    <p>It is payable to the bearer on demand.</p> Signup and view all the answers

    What is the key difference between a cheque and a bill of exchange?

    <p>A cheque is always payable on demand, whereas a bill of exchange may not be.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a bearer instrument?

    <p>It is payable to a particular person or order.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of a bill of exchange?

    <p>It is payable on demand.</p> Signup and view all the answers

    What is the key difference between a promissory note and a bill of exchange?

    <p>A promissory note is signed by the maker, whereas a bill of exchange is signed by the drawer.</p> Signup and view all the answers

    What is the process of a bill of exchange according to the passage?

    <p>The seller sells goods to the buyer and draws a bill of exchange on them.</p> Signup and view all the answers

    What is the key difference between a promissory note and a bill of exchange according to the passage?

    <p>A promissory note is a promise to pay money, while a bill of exchange is an order to pay money.</p> Signup and view all the answers

    According to the passage, what happens when the bill of exchange matures?

    <p>The drawer presents the instrument to the drawee for payment.</p> Signup and view all the answers

    What is the key characteristic of a bill of exchange according to the Negotiable Instruments Act, 1881?

    <p>It is an unconditional order to pay money.</p> Signup and view all the answers

    Who is the 'payee' in the bill of exchange transaction described in the passage?

    <p>The drawer (Mr. Sam)</p> Signup and view all the answers

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