Q1: 1. What is a Bill of Exchange under Section 5 of the Negotiable Instruments Act 1881?

• A) A) A document used for obtaining a loan
• B) B) A written instrument containing an unconditional order
• C) C) A receipt for goods purchased
• D) D) A certificate of deposit

Q2: 2. In which situation would a Bill of Exchange be commonly used?

• A) A) Renting a car
• B) B) Paying for groceries
• C) C) Settling a debt between two businesses
• D) D) Buying a movie ticket

Q3: 3. What is the essential characteristic of a Bill of Exchange?

• A) A) It must be signed by the debtor
• B) B) It must be payable on demand
• C) C) It must contain an unconditional order to pay a certain sum of money
• D) D) It must have a fixed interest rate

Q4: 4. Which party is the drawer of a Bill of Exchange?

• A) A) The person who receives the payment
• B) B) The person who makes the payment
• C) C) The person who orders the payment
• D) D) The person who guarantees the payment

Q5: 5. When is a Bill of Exchange considered payable on demand?

• A) A) When it is payable within a specific time frame
• B) B) When it is payable upon presentation
• C) C) When it is payable upon completion of a service
• D) D) When it is payable after a legal dispute is settled

Q6: 6. Which section of the Negotiable Instruments Act 1881 defines a Bill of Exchange?

• A) A) Section 10
• B) B) Section 5
• C) C) Section 20
• D) D) Section 15

Q7: 7. What happens if the drawee of a Bill of Exchange refuses to accept it?

• A) A) The Bill becomes invalid
• B) B) The drawer is relieved of any liability
• C) C) The holder can sue the drawer for non-acceptance
• D) D) The drawee becomes the new drawer

Q8: 8. How does a Bill of Exchange differ from a promissory note?

• A) A) A promissory note requires acceptance by the drawee
• B) B) A Bill of Exchange involves three parties, while a promissory note involves two
• C) C) A Bill of Exchange is payable to a specific person, while a promissory note is payable to the bearer
• D) D) A promissory note is always payable on demand

Q9: 9. Which party is responsible for making the payment in a Bill of Exchange?

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

Q10: 10. What is the significance of a Bill of Exchange being a negotiable instrument?

• A) A) It cannot be transferred to another party
• B) B) It can be transferred by mere delivery or endorsement
• C) C) It requires the approval of the bank
• D) D) It can only be used for international transactions

Q11: 11. In a scenario where a Bill of Exchange is dishonored, who would typically be held liable?

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

Q12: 12. What action can the holder of a dishonored Bill of Exchange take against the drawer?

• A) A) File criminal charges
• B) B) Sue for damages
• C) C) Cancel the Bill
• D) D) Seek repayment from the drawee

Q13: 13. What is the importance of the date on a Bill of Exchange?

• A) A) It determines the currency of payment
• B) B) It indicates when the payment is due
• C) C) It is optional and does not affect the validity of the Bill
• D) D) It serves as a reference number

Q14: 14. Which party is primarily responsible for accepting or rejecting a Bill of Exchange?

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

Q15: 15. What happens if a Bill of Exchange is not presented for payment within the specified time frame?

• A) A) It becomes void
• B) B) The drawer must pay double the amount
• C) C) It can still be presented for payment at a later date
• D) D) The drawee is relieved of any obligation

Q16: 16. How does a Bill of Exchange facilitate trade and commerce?

• A) A) By eliminating the need for cash transactions
• B) B) By providing a secure payment method
• C) C) By simplifying the process of transferring debts
• D) D) By ensuring prompt and guaranteed payment

Q17: 17. What is the role of an endorser in a Bill of Exchange?

• A) A) To issue the Bill
• B) B) To guarantee payment
• C) C) To transfer rights to another party
• D) D) To accept the Bill on behalf of the drawee

Q18: 18. In what situation would a Bill of Exchange be considered incomplete?

• A) A) If it lacks a signature of the drawer
• B) B) If the amount payable is not specified
• C) C) If the drawee refuses to accept it
• D) D) If the payee requests an extension of time for payment

Q19: 19. What action can a holder take if a Bill of Exchange is lost or stolen?

• A) A) Issue a duplicate Bill
• B) B) File a police report
• C) C) Notify the drawee immediately
• D) D) Cancel the Bill and issue a new one

Q20: 20. How does a Bill of Exchange provide security to the parties involved?

• A) A) By requiring collateral for the payment
• B) B) By involving a neutral third party as the payee
• C) C) By establishing a clear payment obligation
• D) D) By involving a legal representative for each party

Q21: 21. What is the consequence of a Bill of Exchange being drawn without a specific date of payment?

• A) A) It becomes due immediately
• B) B) It is considered incomplete
• C) C) The drawee can choose the payment date
• D) D) The holder can demand payment at any time

Q22: 22. How does the acceptance of a Bill of Exchange impact the liability of the drawee?

• A) A) It makes the drawee solely responsible for payment
• B) B) It transfers the liability to the endorser
• C) C) It relieves the drawer of any obligation
• D) D) It creates a binding commitment to pay

Q23: 23. What role does consideration play in a Bill of Exchange?

• A) A) It determines the validity of the Bill
• B) B) It is not required for a Bill of Exchange
• C) C) It ensures the Bill is payable on demand
• D) D) It specifies the currency of payment

Q24: 24. In a scenario where a Bill of Exchange is dishonored due to insufficient funds, who would be held liable?

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

Q25: 25. How does a Bill of Exchange promote trust and reliability in business transactions?

• A) A) By requiring multiple signatures for approval
• B) B) By providing a legal framework for payment obligations
• C) C) By involving the bank as an intermediary
• D) D) By allowing for payment in installments