Class 11 Finance MCQ Chapter 16 Payment in due Course, Holder and Holder in due Course Solutions in English Medium to each chapter is provided in the list so that you can easily browse through different chapters Class 11 Finance MCQ Chapter 16 Payment in due Course, Holder and Holder in due Course Question Answer and select need one. Class 11 Finance MCQ Chapter 16 Payment in due Course, Holder and Holder in due Course Solutions Download PDF. AHSEC Class 11 Banking Multiple Choice Solutions.
Class 11 Finance MCQ Chapter 16 Payment in due Course, Holder and Holder in due Course
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Payment in due Course, Holder and Holder in due Course
Chapter: 16
| MCQ |
1. According to Section 10, payment in due course must be made under circumstances which:
(i) Afford reasonable ground for believing that the person is not entitled to the payment.
(ii) Do not afford a reasonable ground for believing that the person is not entitled to the payment.
(iii) Are irrelevant to the instrument’s validity.
(iv) Are based on previous transactions with the holder.
Ans: (ii) Do not afford a reasonable ground for believing that the person is not entitled to the payment.
2. Which of the following is an essential feature of payment in due course?
(i) Payment in disregard of the apparent tenor of the instrument
(ii) Payment in accordance with the apparent tenor of the instrument.
(iii) Payment without considering the instrument’s apparent tenor.
(iv) Payment made after the instrument’s maturity.
Ans: (ii) Payment in accordance with the apparent tenor of the instrument.
3. According to Section 9 of the Negotiable Instruments Act, 1881, who is a “Holder in Due Course”?
(i) Any person who holds a negotiable instrument without consideration.
(ii) Any person who becomes the possessor of a negotiable instrument before the amount mentioned becomes payable.
(iii) Any person who receives the instrument after it becomes payable.
(iv) Any person who holds an instrument that has been signed by the payee only.
Ans: (ii) Any person who becomes the possessor of a negotiable instrument before the amount mentioned becomes payable.
4. What happens if a bill of exchange is drawn on behalf of a fictitious person?
(i) The acceptor is not liable to the holder in due course.
(ii) The acceptor is liable to the holder in due course, even with the fictitious name.
(iii) The holder cannot claim payment from the acceptor.
(iv) The bill becomes invalid .
Ans: (ii) The acceptor is liable to the holder in due course, even with the fictitious name.
5. In the case of a suit by a holder in due course, what can an endorser not deny?
(i) The signature of the holder.
(ii) The signature or capacity of the prior party.
(iii) The amount due on the instrument.
(iv) The original validity of the instrument .
Ans: (ii) The signature or capacity of the prior party.
6. What does “Estoppel against denying the capacity of the payee to endorse” imply?
(i) The holder in due course can deny the capacity of the payee to endorse the instrument.
(ii) The claim of the holder in due course cannot be denied on the ground that the payee has no capacity to endorse.
(iii) The payee has the right to deny any endorsements made by prior parties.
(iv) The holder in due course must prove the payee’s capacity before receiving payment.
Ans: (ii) The claim of the holder in due course cannot be denied on the ground that the payee has no capacity to endorse.
7. Which of the following is true regarding the liability of prior parties to a holder in due course?
(i) The prior parties are not liable after the instrument is paid.
(ii) Only the maker or drawer is liable to the holder in due course.
(iii) Every party to the instrument is liable to the holder in due course until it is paid.
(iv) Only the endorser is liable to the holder in due course .
Ans: (iii) Every party to the instrument is liable to the holder in due course until it is paid.
8. What does “sufficient cause to believe that defect existed in the title” refer to when determining a holder in due course?
(i) The holder must know that the instrument is defective.
(ii) The holder must not have sufficient cause to believe that the transferor’s title is defective.
(iii) The holder must be aware of the transferor’s financial situation.
(iv) The holder must know that the instrument has not been issued legally.
Ans: (ii) The holder must not have sufficient cause to believe that the transferor’s title is defective.
9. Which of the following conditions must be satisfied for a person to become a holder in due course?
(i) The instrument must be obtained for a nominal consideration.
(ii) The instrument must be obtained before it becomes payable.
(iii) The instrument must be irregular in form.
(iv) The holder must have knowledge of defects in the title of the transferor.
Ans: (ii) The instrument must be obtained before it becomes payable.
10. What is a key requirement for someone to be considered a “Holder in Due Course”?
(i) The instrument must be held for less than its full value.
(ii) The instrument must be obtained without consideration.
(iii) The instrument must be obtained before it becomes payable.
(iv) The instrument must be incomplete.
Ans: (iii) The instrument must be obtained before it becomes payable.
11. Which of the following is NOT a characteristic of a “Holder in Due Course”?
(i) The instrument must be obtained for valuable consideration.
(ii) The instrument must be obtained after it becomes payable.
(iii) The holder must not have knowledge of any defect in the title of the transferor.
(iv) The holder must have received the instrument before it becomes payable.
Ans: (ii) The instrument must be obtained after it becomes payable.
12. Which of the following is a right enjoyed by a holder in due course?
(i) Right to deny the validity of the instrument.
(ii) Better title.
(iii) Right to revoke the instrument.
(iv) Right to refuse payment
Ans: (ii) Better title.
13. What does “Purging of prior defects” mean in the context of a holder in due course?
(i) The holder is responsible for defects in the title of the transferor.
(ii) The holder enjoys protection even if there were defects in the title of prior endorsers.
(iii) The holder must prove the title of the transferor.
(iv) The holder is not entitled to payment if there were prior defects.
Ans: (ii) The holder enjoys protection even if there were defects in the title of prior endorsers.
14. Under the doctrine of “Estoppel against denying capacity of payee to endorse,” can a holder in due course deny the capacity of the payee to endorse?
(i) Yes, if the payee is not legally competent.
(ii) No, the holder cannot deny the payee’s capacity to endorse.
(iii) Yes, but only if the payee was a minor.
(iv) No, unless the endorsement is forged.
Ans: (ii) No, the holder cannot deny the payee’s capacity to endorse.
15. What does the principle of “Estoppel against denying signature or capacity of prior party” imply?
(i) An endorser can deny the signature of any prior party.
(ii) A holder in due course can deny the signature of any prior party.
(iii) An endorser cannot deny the signature or capacity of any prior party when the holder in due course sues.
(iv) A holder in due course cannot sue prior parties.
Ans: (iii) An endorser cannot deny the signature or capacity of any prior party when the holder in due course sues.
