Q1: 1. What is the legal term for an indorser who excludes his own liability on a negotiable instrument?

• A) A) Conditional indorser
• B) B) Limited indorser
• C) C) Excluded indorser
• D) D) Disclaimed indorser

Q2: 2. In which section of the Negotiable Instruments Act 1881 is the concept of an indorser who excludes his liability addressed?

• A) A) Section 50
• B) B) Section 52
• C) C) Section 54
• D) D) Section 56

Q3: 3. A real life scenario: John indorses a promissory note to Peter, but states "I am not liable if the maker defaults." What type of indorser is John?

• A) A) Special indorser
• B) B) Conditional indorser
• C) C) Qualified indorser
• D) D) Unconditional indorser

Q4: 4. What is the consequence of an indorser excluding his own liability on a negotiable instrument?

• A) A) The instrument becomes non-negotiable
• B) B) The indorser remains liable to subsequent holders
• C) C) The indorser's liability is transferred to the maker
• D) D) The instrument becomes void

Q5: 5. When does an indorser who excludes his own liability become discharged from future liability on the instrument?

• A) A) When the instrument is dishonored by the maker
• B) B) When the instrument is negotiated back to the indorser
• C) C) When the instrument is paid in full by the maker
• D) D) When the indorser gives notice of exclusion to the holder

Q6: 6. A real life scenario: Sarah indorses a check to her friend Mark, but adds the condition "Payable only if presented within 30 days." What type of indorser is Sarah?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q7: 7. How does a conditional indorser affect the negotiation of a negotiable instrument?

• A) A) It restricts the instrument to a specific payee
• B) B) It limits the liability of the indorser to certain conditions
• C) C) It makes the instrument non-transferable
• D) D) It invalidates the instrument

Q8: 8. What is the primary purpose of a conditional indorsement on a negotiable instrument?

• A) A) To transfer the liability to the indorsee
• B) B) To exclude the liability of the indorser
• C) C) To prevent negotiation of the instrument
• D) D) To make the instrument non-negotiable

Q9: 9. A real life scenario: Alex indorses a promissory note to his brother Mike, but states "I guarantee payment only if the principal debtor fails to pay." What type of indorser is Alex?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q10: 10. How does a conditional indorser impact the enforceability of a negotiable instrument in case of default by the maker?

• A) A) The conditional indorser is automatically liable
• B) B) The conditional indorser is not liable unless certain conditions are met
• C) C) The instrument becomes void
• D) D) The maker assumes the liability of the indorser

Q11: 11. In a real-life scenario, if a negotiable instrument is indorsed with the condition "Payable upon receipt of goods," what type of indorser is this?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q12: 12. What action should a holder take if a negotiable instrument is indorsed with a conditional indorsement?

• A) A) Negotiate the instrument without any restrictions
• B) B) Seek clarification from the indorser regarding the conditions
• C) C) Disregard the condition and enforce the instrument as is
• D) D) Return the instrument to the previous holder

Q13: 13. A real-life scenario: Emily indorses a bill of exchange to her business partner with the condition "Payment guaranteed only if the shipment arrives on time." What type of indorser is Emily?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q14: 14. How does a conditional indorser differ from an unconditional indorser in terms of liability on a negotiable instrument?

• A) A) A conditional indorser is liable only if certain conditions are met
• B) B) An unconditional indorser is never liable on the instrument
• C) C) A conditional indorser has no liability at all
• D) D) An unconditional indorser is liable regardless of any conditions

Q15: 15. What happens if a conditional indorser fails to fulfill the specified conditions on a negotiable instrument?

• A) A) The instrument becomes void
• B) B) The liability passes on to the previous holder
• C) C) The indorser remains liable regardless of the conditions
• D) D) The indorser is discharged from liability

Q16: 16. In a real-life scenario, if a negotiable instrument is indorsed with the condition "Payment only upon completion of services," what type of indorser is this?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q17: 17. Can a conditional indorser be held liable if the specified conditions are not met on a negotiable instrument?

• A) A) Yes, the indorser is always liable
• B) B) No, the indorser is discharged from liability
• C) C) It depends on the specific conditions outlined
• D) D) Only if the maker defaults

Q18: 18. What precaution should a holder take when dealing with a negotiable instrument indorsed by a conditional indorser?

• A) A) Ignore the conditions and enforce the instrument
• B) B) Seek legal advice before negotiating the instrument
• C) C) Communicate with the indorser to understand the conditions
• D) D) Return the instrument to the previous holder

Q19: 19. A real-life scenario: Tom indorses a promissory note to his colleague with the condition "Payment only upon successful project completion." What type of indorser is Tom?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q20: 20. How does a conditional indorser impact the negotiability of a negotiable instrument?

• A) A) It makes the instrument non-negotiable
• B) B) It limits the negotiability to specific conditions
• C) C) It enhances the negotiability of the instrument
• D) D) It has no effect on the negotiability

Q21: 21. What recourse does a holder have if a conditional indorser refuses to honor the conditions on a negotiable instrument?

• A) A) Sue the maker for the amount due
• B) B) Hold the indorser legally responsible
• C) C) Negotiate the instrument with a new indorser
• D) D) Return the instrument to the previous holder

Q22: 22. In a real-life scenario, if a negotiable instrument is indorsed with the condition "Payment upon approval of inspection," what type of indorser is this?

• A) A) Conditional indorser
• B) B) Qualified indorser
• C) C) Special indorser
• D) D) Unconditional indorser

Q23: 23. Can a conditional indorser impose new conditions on a negotiable instrument after the initial indorsement?

• A) A) Yes, as long as the conditions are reasonable
• B) B) No, the conditions are fixed at the time of indorsement
• C) C) Only if all parties involved agree to the new conditions
• D) D) Only if the holder consents to the new conditions

Q24: 24. What is the significance of a conditional indorsement in the negotiation of a negotiable instrument?

• A) A) It creates uncertainty in the enforceability of the instrument
• B) B) It simplifies the transfer of the instrument to new holders
• C) C) It increases the value of the instrument
• D) D) It eliminates the need for further indorsements

Q25: 25. How does a conditional indorsement affect the risk management strategy of a holder of a negotiable instrument?

• A) A) It reduces the risk by shifting liability to the indorser
• B) B) It increases the risk of non-payment due to uncertain conditions
• C) C) It has no impact on the risk management strategy
• D) D) It eliminates the risk of default by the maker