QUIZ 1

NEGOTIABLE INSTRUMENTS LAW

TRUE OR FALSE: Write TRUE if the statement is ABSOLUTELY TRUE; otherwise write
FALSE. NO ERASURES ALLOWED.

1. A letter of credit is a negotiable instrument.

2. A Treasury warrant is a non-negotiable instrument.
3. A Postal Money order is a negotiable instrument.
4. A Bill of Lading is a non-negotiable instrument.
5. A Certificate of Stock is a negotiable instrument.
6. A Warehouse receipt is a non-negotiable instrument.
7. A promissory note is an unconditional promise in writing made by one person to another
signed by the maker, engaging to pay on demand, or at a fixed or determinable future
time, a sum certain in money, to order or to bearer.
8. A non-negotiable instrument is an instrument which does not comply with Section 1 of
the Negotiable Instruments Law.
9. When a negotiable instrument is transferred from one person to another, such that the
transferee becomes the holder of the instrument, it is called an assignment.
10. Indorsement is the transfer of possession, actual or constructive, from one person to
another.
11. Holder means the payee or indorsee of a bill or a note, who is in possession of it, or the
bearer thereof.
12. Issue means the first delivery of the instrument, complete in form, to a person who takes
it as a holder.
13. A bill of exchange is an order instrument.
14. A promissory note is a bearer instrument.
15. The parties in a promissory note are the maker and the drawer.
16. The parties in a bill of exchange are the, drawer, the drawee and the payee.
17. A negotiable instrument must always be in writing.
18. A negotiable instrument must contain an unconditional promise or order to pay a sum
certain in money.
19. A negotiable instrument must be payable on demand.
20. Where the instrument is addressed to a drawee, he must be named or otherwise indicated
therein.