Q1: 1. What is the significance of Section 111 of the Negotiable Instruments Act 1881?

• A) A) It deals with the liability of the drawer
• B) B) It deals with the liability of the acceptor for honour
• C) C) It deals with the liability of the endorser
• D) D) It deals with the liability of the holder in due course

Q2: 2. In which situation does the liability of the acceptor for honour arise?

• A) A) When the drawer defaults on payment
• B) B) When the drawee bank dishonours the cheque
• C) C) When the holder refuses to accept the payment
• D) D) When the bill of exchange is lost

Q3: 3. Who can accept for honour under Section 111 of the Negotiable Instruments Act 1881?

• A) A) Any person mentioned in the bill of exchange
• B) B) Only the drawer of the bill
• C) C) Only the drawee of the bill
• D) D) Any person willing to pay on behalf of the drawee

Q4: 4. What is the effect of acceptance for honour on the liability of the original acceptor?

• A) A) The original acceptor is discharged from liability
• B) B) The original acceptor remains liable
• C) C) The liability of the original acceptor is transferred to the acceptor for honour
• D) D) The original acceptor can claim damages from the acceptor for honour

Q5: 5. When can the acceptor for honour claim reimbursement from the party for whose honour he accepted?

• A) A) Immediately after accepting for honour
• B) B) Within 24 hours of acceptance for honour
• C) C) Only if the original acceptor defaults on payment
• D) D) Only if the drawer agrees to reimburse

Q6: 6. In a real-life scenario, if the drawee bank dishonours a cheque due to insufficient funds, who can step in as the acceptor for honour to ensure payment?

• A) A) The drawer's spouse
• B) B) A close relative of the drawer
• C) C) A business partner of the drawer
• D) D) Any person mentioned in the bill of exchange

Q7: 7. What happens if the acceptor for honour fails to give notice of acceptance to the holder of the bill?

• A) A) The acceptor for honour loses the right to claim reimbursement
• B) B) The acceptor for honour remains liable for payment
• C) C) The bill becomes void
• D) D) The holder cannot enforce payment from anyone

Q8: 8. Under Section 111 of the Negotiable Instruments Act 1881, the liability of the acceptor for honour is similar to that of a

• A) A) Guarantor
• B) B) Surety
• C) C) Indorser
• D) D) Endorser

Q9: 9. If the acceptor for honour pays the bill, who can he seek reimbursement from?

• A) A) The drawer
• B) B) The holder
• C) C) The original acceptor
• D) D) The drawee

Q10: 10. In a case where the original acceptor is unable to make payment on the due date, who can intervene by accepting the bill for honour?

• A) A) A creditor of the drawer
• B) B) A close friend of the drawer
• C) C) A sibling of the drawer
• D) D) A colleague of the drawer

Q11: 11. What is the primary purpose of acceptance for honour under Section 111 of the Negotiable Instruments Act 1881?

• A) A) To transfer the liability to the holder
• B) B) To expedite payment and maintain the creditworthiness of the drawer
• C) C) To avoid payment altogether
• D) D) To shift the responsibility to the drawee

Q12: 12. If the acceptor for honour pays the bill, what right does he acquire against the holder and all parties to the bill?

• A) A) Right to seize the goods of the drawer
• B) B) Right to demand additional interest
• C) C) Right to recover the amount from any party liable on the bill
• D) D) Right to demand a higher amount than the bill value

Q13: 13. In a case where the original acceptor refuses to pay and there is no acceptor for honour, who bears the ultimate liability for the bill?

• A) A) The drawer
• B) B) The holder
• C) C) The endorser
• D) D) The drawee

Q14: 14. In a scenario where the original acceptor for honour is unable to pay, who becomes responsible for the payment?

• A) A) The drawer's employer
• B) B) The drawer's landlord
• C) C) The drawer himself
• D) D) The drawer's legal advisor

Q15: 15. What is the time limit within which the acceptor for honour should give notice of his acceptance to the holder of the bill?

• A) A) Within 3 working days
• B) B) Within 24 hours
• C) C) Within 7 calendar days
• D) D) Within a reasonable time

Q16: 16. If the acceptor for honour fails to specify the party for whose honour he accepts, what is the consequence?

• A) A) The acceptance is deemed invalid
• B) B) The holder decides whom to hold liable
• C) C) The drawer automatically becomes liable
• D) D) The drawee bank is responsible for payment

Q17: 17. What is the legal status of the acceptor for honour in relation to the bill after making payment?

• A) A) He becomes the new drawer of the bill
• B) B) He is discharged from all liability under the bill
• C) C) He becomes the new payee of the bill
• D) D) He assumes the role of the drawer

Q18: 18. When does the liability of the acceptor for honour come to an end?

• A) A) After 30 days of acceptance
• B) B) Upon payment of the bill
• C) C) When the drawer acknowledges the payment
• D) D) When the holder realizes the bill is lost

Q19: 19. In a situation where the acceptor for honour pays the bill, who should he notify about the payment?

• A) A) The drawer only
• B) B) The drawer and the holder
• C) C) The holder only
• D) D) The drawee bank

Q20: 20. If the acceptor for honour fails to make payment on the bill, what remedy does the holder have?

• A) A) Seize the acceptor's property
• B) B) Sue the acceptor for damages
• C) C) Seek reimbursement from the drawer
• D) D) Cancel the bill of exchange

Q21: 21. What happens if the acceptor for honour refuses to pay the bill after accepting for honour?

• A) A) The bill is considered void
• B) B) The holder can sue the acceptor for damages
• C) C) The drawer is automatically liable
• D) D) The bill is returned to the drawee bank

Q22: 22. In a case where the acceptor for honour becomes insolvent after accepting the bill, who becomes liable for payment?

• A) A) The drawer
• B) B) The holder
• C) C) The original acceptor
• D) D) The acceptor for honour's guarantor

Q23: 23. How does acceptance for honour differ from payment in due course under the Negotiable Instruments Act 1881?

• A) A) Acceptance for honour requires a higher fee
• B) B) Payment in due course is mandatory, while acceptance for honour is voluntary
• C) C) Acceptance for honour can only be done by a bank
• D) D) Payment in due course involves legal proceedings

Q24: 24. If the holder refuses the acceptor for honour's offer to pay, what options does the acceptor have?

• A) A) Seek legal advice
• B) B) Force the holder to accept the payment
• C) C) Withdraw the offer of acceptance for honour
• D) D) Notify the drawee bank

Q25: 25. What is the primary reason for a party to accept for honour under Section 111 of the Negotiable Instruments Act 1881?

• A) A) To avoid legal consequences
• B) B) To show goodwill towards the drawer
• C) C) To maintain the credit of the drawer
• D) D) To transfer liability to another party