Q1: 1. What does Section 79 of the Negotiable Instruments Act 1881 pertain to?

• A) A) Payment of interest on negotiable instruments
• B) B) Regulation of stamp duty on negotiable instruments
• C) C) Rules regarding endorsement of negotiable instruments
• D) D) Guidelines for crossing negotiable instruments

Q2: 2. In what scenario does Section 79 of the Act come into play?

• A) A) When the rate of interest is not specified in the negotiable instrument
• B) B) When the instrument is not properly stamped
• C) C) When the payee refuses to accept the instrument
• D) D) When the instrument is dishonored by the drawee bank

Q3: 3. What is the consequence if a negotiable instrument does not specify the rate of interest?

• A) A) No interest is payable
• B) B) Fixed interest rate is assumed
• C) C) Both parties can agree on an interest rate later
• D) D) The instrument becomes invalid

Q4: 4. How does the absence of an interest rate impact the parties involved in a negotiable instrument transaction?

• A) A) It benefits the payee
• B) B) It benefits the drawer
• C) C) It may lead to disputes or confusion
• D) D) It accelerates the payment process

Q5: 5. Which section of the Negotiable Instruments Act 1881 addresses the issue of interest when a rate is specified?

• A) A) Section 65
• B) B) Section 79
• C) C) Section 138
• D) D) Section 87

Q6: 6. When does the liability to pay interest arise in a negotiable instrument with a specified interest rate?

• A) A) At the time of issuance
• B) B) Upon maturity
• C) C) After the instrument is dishonored
• D) D) When the payee demands it

Q7: 7. What is the significance of specifying an interest rate in a negotiable instrument under Section 79?

• A) A) It ensures timely payment
• B) B) It aids in calculating the total amount due
• C) C) It eliminates the need for stamp duty
• D) D) It allows for indefinite deferment of payment

Q8: 8. How does the specified interest rate impact the negotiation of a negotiable instrument?

• A) A) It simplifies the negotiation process
• B) B) It increases the negotiability of the instrument
• C) C) It limits the parties involved
• D) D) It is irrelevant to the negotiation

Q9: 9. What action can a payee take if the drawer fails to pay the specified interest on a negotiable instrument?

• A) A) Cancel the instrument
• B) B) File a lawsuit for recovery
• C) C) Seek arbitration
• D) D) Waive the interest amount

Q10: 10. How does the specified interest rate protect the payee in a negotiable instrument transaction?

• A) A) Ensures additional income
• B) B) Acts as a deterrent for default
• C) C) Increases stamp duty
• D) D) Reduces negotiability

Q11: 11. In a real-life scenario, if a promissory note does not mention an interest rate, what is the implication under Section 79?

• A) A) The note is deemed invalid
• B) B) The payee can claim a reasonable rate of interest
• C) C) No interest is payable
• D) D) The drawer is solely liable for interest

Q12: 12. How does the absence of a specified interest rate affect the calculation of the final amount due on a negotiable instrument?

• A) A) Increases the total amount
• B) B) Adds complexity to the calculation
• C) C) Requires court intervention
• D) D) Makes the instrument non-negotiable

Q13: 13. If a promissory note specifies a high interest rate that is deemed unreasonable, what recourse does the payee have under Section 79?

• A) A) Accept the rate as stated
• B) B) Negotiate a lower rate with the drawer
• C) C) Seek legal redress
• D) D) Cancel the negotiable instrument

Q14: 14. How does the provision of a specified interest rate in a negotiable instrument facilitate financial planning for the parties involved?

• A) A) Allows for delayed payments
• B) B) Enables accurate forecasting of liabilities
• C) C) Encourages defaulting on payments
• D) D) Reduces the negotiability of the instrument

Q15: 15. In a case where the interest rate specified in a bill of exchange is unclear, how does Section 79 guide the resolution of disputes?

• A) A) Requires mediation by the Reserve Bank
• B) B) Allows for subjective interpretation by the parties
• C) C) Provides for a reasonable rate to be applied
• D) D) Invalidates the bill of exchange

Q16: 16. What role does the specified interest rate play in ensuring the enforceability of a negotiable instrument under Section 79?

• A) A) Acts as a deterrent for dishonor
• B) B) Validates the stamp duty
• C) C) Establishes the terms of payment clearly
• D) D) Increases the negotiability of the instrument

Q17: 17. If a promissory note specifies a compound interest rate, how does Section 79 regulate the calculation of interest?

• A) A) Allows for compounding at the discretion of the payee
• B) B) Mandates simple interest calculation only
• C) C) Permits compound interest if mutually agreed upon
• D) D) Prohibits the application of any interest

Q18: 18. How does the presence of a specified interest rate impact the negotiation of a negotiable instrument in the commercial world?

• A) A) Encourages delay in payments
• B) B) Enhances credibility and clarity of terms
• C) C) Complicates the endorsement process
• D) D) Exempts the parties from stamp duty

Q19: 19. In a scenario where the payee demands a higher interest rate than specified in the negotiable instrument, what recourse does the drawer have under Section 79?

• A) A) Must comply with the payee's demand
• B) B) Can negotiate a mutually acceptable rate
• C) C) Refuse to pay any interest
• D) D) Suffer legal penalties

Q20: 20. How does the absence of a specified interest rate impact the legal enforceability of a negotiable instrument under Section 79?

• A) A) Invalidates the negotiable instrument
• B) B) Requires court intervention for determination
• C) C) Leaves the interest calculation to the bank
• D) D) Simplifies the legal process

Q21: 21. If a promissory note states a specific rate of interest but does not mention the frequency of interest payments, how is the interest calculated under Section 79?

• A) A) Annually
• B) B) Quarterly
• C) C) Monthly
• D) D) As per prevailing market rates

Q22: 22. What obligation does the drawee have regarding the payment of interest when a negotiable instrument specifies a rate under Section 79?

• A) A) No obligation to pay interest
• B) B) Must pay the specified interest rate
• C) C) Can negotiate the interest rate
• D) D) Pay at the discretion of the bank manager

Q23: 23. In a situation where the payee refuses to accept the interest due on a negotiable instrument, what legal action can the drawer take under Section 79?

• A) A) File a criminal complaint
• B) B) Seek arbitration for resolution
• C) C) Deposit the interest in a court account
• D) D) Deny the existence of any interest

Q24: 24. How does the presence of a specified interest rate in a negotiable instrument impact the negotiation and transferability of the instrument?

• A) A) Restricts the negotiation to only one party
• B) B) Increases the complexity of endorsement
• C) C) Enhances the transferability of the instrument
• D) D) Invalidates the instrument for further negotiation

Q25: 25. If a promissory note states a range of interest rates instead of a specific rate, how is the interest amount calculated as per Section 79?

• A) A) The average of the range
• B) B) The highest rate in the range
• C) C) The lowest rate in the range
• D) D) The rate closest to prevailing market rates