Q1: 1. What is the effect of the discharge of a party from liability on a promissory note?

• A) A) The liability of all parties is discharged
• B) B) The liability of the discharged party is not affected
• C) C) The liability of the discharged party is transferred to the holder
• D) D) The note becomes invalid

Q2: 2. In which situation can a party be discharged from liability on a negotiable instrument?

• A) A) By mere delivery to a holder in due course
• B) B) By material alteration of the instrument
• C) C) By unauthorized completion of the instrument
• D) D) By negotiation to a third party

Q3: 3. What happens when a promissory note is destroyed?

• A) A) The liability of all parties is discharged
• B) B) The maker remains liable for the note
• C) C) The holder becomes liable for the note
• D) D) The note is no longer valid

Q4: 4. If the holder releases one of the parties to a bill of exchange from liability, what is the consequence?

• A) A) The released party is still liable to the holder
• B) B) The liability of all parties is discharged
• C) C) The holder loses rights against the released party
• D) D) The released party is no longer liable on the bill

Q5: 5. When can a party be discharged by cancellation of his signature on a promissory note?

• A) A) Only with the consent of the other parties
• B) B) At any time by the holder
• C) C) If the note is not yet due
• D) D) If the note is payable to bearer

Q6: 6. What is the effect of the discharge of a party from liability on a bill of exchange?

• A) A) The bill becomes void
• B) B) The liability of the discharged party is transferred to the drawer
• C) C) The liability of all parties is discharged
• D) D) The discharged party remains liable to the holder

Q7: 7. In which situation can a party be discharged from liability on a cheque?

• A) A) By crossing the cheque
• B) B) By dishonor of the cheque
• C) C) By renouncing his claim against the drawer
• D) D) By cancellation of the cheque

Q8: 8. What happens when a promissory note is discharged by payment?

• A) A) The note becomes invalid
• B) B) The liability of the maker is extinguished
• C) C) The holder becomes the new maker of the note
• D) D) The maker must issue a new note

Q9: 9. If a party to a promissory note is discharged due to the holder's unauthorized act, what is the consequence?

• A) A) The discharged party remains liable to the holder
• B) B) The liability of the discharged party is transferred to the drawer
• C) C) The holder loses rights against the discharged party
• D) D) The note becomes void

Q10: 10. When can a party be discharged from liability by release or discharge of the principal debtor?

• A) A) Only if the party is the maker of the instrument
• B) B) Only with the consent of the holder
• C) C) If the party is a surety for the principal debtor
• D) D) If the party is the payee of the instrument

Q11: 11. What happens when a bill of exchange is discharged by cancellation?

• A) A) The bill becomes void
• B) B) The liability of the drawer is extinguished
• C) C) The acceptor becomes the new drawer of the bill
• D) D) The bill must be reissued with a new date

Q12: 12. If a party to a cheque is discharged by alteration without consent, what is the consequence?

• A) A) The discharged party remains liable to the drawer
• B) B) The cheque becomes invalid
• C) C) The holder loses rights against the discharged party
• D) D) The drawer becomes liable for the cheque

Q13: 13. When can a party be discharged from liability by release of a co-surety?

• A) A) Only if the co-surety agrees to the release
• B) B) If the release is made by the principal debtor
• C) C) If the release is made by the holder
• D) D) If the co-surety becomes the new holder of the instrument

Q14: 14. What is the effect of the discharge of a party from liability on a promissory note due to the holder's material alteration?

• A) A) The holder loses rights against the discharged party
• B) B) The discharged party remains liable to the holder
• C) C) The note becomes void
• D) D) The liability is transferred to the next party in line

Q15: 15. If a party to a bill of exchange is discharged by the holder's act that impairs the ability to recover from other parties, what is the consequence?

• A) A) The discharged party is no longer liable on the bill
• B) B) The liability of all parties is discharged
• C) C) The holder loses rights against the discharged party
• D) D) The discharged party remains liable to the holder

Q16: 16. When can a party be discharged from liability by release or discharge of the principal debtor?

• A) A) If the party is the maker of the instrument
• B) B) Only with the consent of the holder
• C) C) If the party is a surety for the principal debtor
• D) D) If the party is the payee of the instrument

Q17: 17. What happens when a cheque is discharged by payment?

• A) A) The cheque becomes void
• B) B) The liability of the drawer is extinguished
• C) C) The payee becomes the new drawer of the cheque
• D) D) The drawer must issue a new cheque

Q18: 18. If a party to a promissory note is discharged due to the holder's unauthorized act, what is the consequence?

• A) A) The discharged party remains liable to the holder
• B) B) The liability of the discharged party is transferred to the drawer
• C) C) The holder loses rights against the discharged party
• D) D) The note becomes void

Q19: 19. When can a party be discharged from liability by release or discharge of the principal debtor?

• A) A) If the party is the maker of the instrument
• B) B) Only with the consent of the holder
• C) C) If the party is a surety for the principal debtor
• D) D) If the party is the payee of the instrument

Q20: 20. What happens when a bill of exchange is discharged by payment?

• A) A) The bill becomes void
• B) B) The liability of the drawer is extinguished
• C) C) The acceptor becomes the new drawer of the bill
• D) D) The bill must be reissued with a new date

Q21: 21. If a party to a cheque is discharged by alteration without consent, what is the consequence?

• A) A) The discharged party remains liable to the drawer
• B) B) The cheque becomes invalid
• C) C) The holder loses rights against the discharged party
• D) D) The drawer becomes liable for the cheque

Q22: 22. When can a party be discharged from liability by release of a co-surety?

• A) A) Only if the co-surety agrees to the release
• B) B) If the release is made by the principal debtor
• C) C) If the release is made by the holder
• D) D) If the co-surety becomes the new holder of the instrument

Q23: 23. What is the effect of the discharge of a party from liability on a promissory note due to the holder's material alteration?

• A) A) The holder loses rights against the discharged party
• B) B) The discharged party remains liable to the holder
• C) C) The note becomes void
• D) D) The liability is transferred to the next party in line

Q24: 24. If a party to a bill of exchange is discharged by the holder's act that impairs the ability to recover from other parties, what is the consequence?

• A) A) The discharged party is no longer liable on the bill
• B) B) The liability of all parties is discharged
• C) C) The holder loses rights against the discharged party
• D) D) The discharged party remains liable to the holder

Q25: 25. When can a party be discharged from liability by release or discharge of the principal debtor?

• A) A) If the party is the maker of the instrument
• B) B) Only with the consent of the holder
• C) C) If the party is a surety for the principal debtor
• D) D) If the party is the payee of the instrument