Question

List four features of negotiable instruments and explain any two in brief.

Answer 1

Features of negotiable instruments:

1. Transferability: They can be transferred easily from one person to another.
2. Guaranteed Payment: The payment to the holder is guaranteed as per the terms.
3. Written Document: It must be in writing.
4. Legal Framework: They are governed by legal acts such as the Negotiable Instruments Act, 1881.

Explanation:

• Transferability: Ownership of the instrument can be transferred by endorsement and delivery.
• Guaranteed Payment: The payee is assured of receiving the payment if the instrument is valid.