Q1: 1. What is the minimum number of parties required to create a valid promissory note under Section 4 of the Negotiable Instruments Act 1881?

• A) A) One
• B) B) Two
• C) C) Three
• D) D) Four

Q2: 2. Which of the following statements is true regarding a promissory note?

• A) A) It must be payable to the bearer on demand
• B) B) It can only be made by a bank
• C) C) It must be in writing
• D) D) It does not require any stamping

Q3: 3. In a promissory note, who is the maker?

• A) A) The person to whom the money is promised
• B) B) The person making the promise to pay
• C) C) The person who receives the payment
• D) D) The bank issuing the note

Q4: 4. Which of the following is a necessary element for a promissory note to be valid?

• A) A) It must be payable in foreign currency
• B) B) The amount must be uncertain
• C) C) It must be dated
• D) D) It must be oral

Q5: 5. A promissory note can be made payable on

• A) A) A specific date
• B) B) A specific event
• C) C) Demand
• D) D) All of the above

Q6: 6. What is the consequence of a promissory note not being dated?

• A) A) It becomes void
• B) B) It is still valid
• C) C) It is treated as a bill of exchange
• D) D) The payee loses the right to enforce it

Q7: 7. Who can demand payment under a promissory note?

• A) A) The maker only
• B) B) The payee only
• C) C) The endorser
• D) D) Any holder of the note

Q8: 8. What happens if a promissory note is not stamped as required by law?

• A) A) It is still valid
• B) B) It becomes void
• C) C) The stamp duty can be paid later
• D) D) The payee is liable for the stamp duty

Q9: 9. Which of the following is NOT a characteristic of a promissory note?

• A) A) Unconditional promise to pay
• B) B) Payable to order or bearer
• C) C) Must be drawn on a bank
• D) D) Signed by the maker

Q10: 10. In a promissory note, the promise to pay must be

• A) A) Conditional
• B) B) Unconditional
• C) C) Subject to approval
• D) D) Verbal

Q11: 11. What is the legal effect of a promissory note being payable to bearer?

• A) A) It cannot be transferred
• B) B) It can be transferred by mere delivery
• C) C) It can only be transferred by endorsement
• D) D) It becomes non-negotiable

Q12: 12. Which of the following is NOT a party to a promissory note?

• A) A) Drawer
• B) B) Payee
• C) C) Endorser
• D) D) Acceptor

Q13: 13. A promissory note must be in writing and signed by the

• A) A) Payee
• B) B) Endorser
• C) C) Drawee
• D) D) Maker

Q14: 14. What is the consequence of a promissory note being payable to a fictitious person?

• A) A) It is void
• B) B) It becomes payable to the bearer
• C) C) The maker is discharged from liability
• D) D) The payee must identify the fictitious person

Q15: 15. Can a promissory note be made payable to two or more payees jointly?

• A) A) Yes, but only if they are related
• B) B) Yes, and all must endorse for transfer
• C) C) No, it must be payable to only one person
• D) D) No, it must be payable to the bearer

Q16: 16. What is the maximum validity period for a promissory note to be enforceable under the Negotiable Instruments Act 1881?

• A) A) 1 year
• B) B) 2 years
• C) C) 3 years
• D) D) 5 years

Q17: 17. If a promissory note is lost, stolen, or destroyed, what action should the holder take?

• A) A) Nothing, it is the maker's responsibility
• B) B) Issue a duplicate note
• C) C) Report to the police
• D) D) Cancel the original note

Q18: 18. Which of the following is NOT a mode of payment in a promissory note?

• A) A) Cash
• B) B) Cheque
• C) C) Online transfer
• D) D) Barter

Q19: 19. What is the significance of consideration in a promissory note?

• A) A) It is not required
• B) B) It validates the promise to pay
• C) C) It must be in the form of goods
• D) D) It can be promised in the future

Q20: 20. Who is primarily liable to pay under a promissory note?

• A) A) The payee
• B) B) The endorser
• C) C) The maker
• D) D) The drawer

Q21: 21. In case of a promissory note being dishonored, the holder can

• A) A) Seek legal action immediately
• B) B) Wait for the maturity period to expire
• C) C) Request an extension of payment
• D) D) Negotiate with the bank

Q22: 22. Can a promissory note be made payable on a contingency?

• A) A) Yes
• B) B) No
• C) C) Only if approved by the court
• D) D) Only if the payee agrees

Q23: 23. If a promissory note is payable with interest and the rate is not specified, what rate will apply?

• A) A) 6% per annum
• B) B) 9% per annum
• C) C) 12% per annum
• D) D) 15% per annum

Q24: 24. What is the legal consequence of a promissory note being altered without the consent of the parties?

• A) A) It becomes void
• B) B) It remains valid
• C) C) The alteration is deemed valid
• D) D) The payee must accept the alteration

Q25: 25. In what circumstances can a promissory note be discharged?

• A) A) By cancellation by the maker
• B) B) By agreement between the parties
• C) C) By payment in full
• D) D) All of the above