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Bills of Exchange Test 7

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Bills of Exchange Test 7
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Payment of bill on its due date is known as ________________.
    Solution
    When the Drawee makes payment of the bill after its exact tenure i.e on its due date, it is said that the bill is honoured.
  • Question 2
    1 / -0
    The person on whose favor a bill is endorsed is called as _______.
    Solution
    The person, either the drawer or holder, who endorses the bill to any one by signing on the back of it is called an endorser.
    And the person on whose favor a bill is endorsed is called as Endorsee.
  • Question 3
    1 / -0
    Bill of exchange is drawn by ________.
    Solution
    According to Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of  a certain person or to the bearer of the instrument. A bill of exchange is generally drawn by the creditor upon his debtor.
  • Question 4
    1 / -0
    How many parties are usually found in the case of a bill of exchange?
    Solution
    There are three parties to a bill of exchange:
    (1) Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor.
    (2) Drawee is the person upon whom the bill of exchange is drawn. Drawee is the purchaser or debtor of the goods upon whom the bill of exchange is drawn.
    (3) Payee is the person to whom the payment is made.
  • Question 5
    1 / -0
    The term bill of exchange is defined in section _________ of the Negotiable Instruments Act.
    Solution
    According to section 5 of the Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. A bill of exchange is generally drawn by the creditor upon his debtor.
  • Question 6
    1 / -0
    The person who draws the cheque and signs on it is the ______.
    Solution
    Drawer is the maker of the bill of exchange. A seller/creditor who is entitled to receive money from the debtor can draw a bill of exchange upon the buyer/debtor. The drawer after writing the bill of exchange has to sign it as maker of the bill of exchange.
  • Question 7
    1 / -0
    Bill of exchange is an _________.
    Solution
    According to section 5 of the Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument  in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. A bill of exchange is generally drawn by the creditor upon his debtor. It has to be accepted by the drawee (debtor) or someone on his behalf. It is just a draft till its acceptance is made.
  • Question 8
    1 / -0
    ________ is not an essential requirement of a valid bill of exchange.
  • Question 9
    1 / -0
    Inland bills are those bills which are ________ or ________ in India.
    Solution
    A bill of exchange which is drawn or made in a country and paid in the jurisdiction of the same country is called inland bill. The section 11 of the Negotiable Instruments Act, 1881 provides that the bills of exchange (including cheques/promissory notes) drawn or made in India and made payable in or drawn upon any person resident in India shall be deemed to be an inland bill of exchange (or inland cheques or inland promissory notes as the case may be).
  • Question 10
    1 / -0
    Drawee of a bill of exchange is generally a ________.
    Solution
    According to the Negotiable Instruments Act, 1881, a bill of exchange is defined as an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of a certain person or to the bearer of the instrument. There are three parties to a bill of exchange. Drawee is the person upon whom the bill of exchange is drawn. Drawee is the purchaser or debtor of the goods upon whom the bill of exchange is drawn. 

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