Question

Which of the following is not a negotiable instrument?

• A. Bill of exchange
• B. Promissory notes
• C. Bearer Cheques
• D. Letter of credit

Hint:

Negotiable instruments must be freely transferable and guarantee payment; letters of credit are conditional instruments.

Answer 1

The Correct Option is D

Step 1: Define negotiable instruments.
- Negotiable instruments are transferable documents ensuring payment of a fixed sum to the holder or a designated party.
- Examples include: Bills of exchange, Promissory notes, and Checks.
- While letters of credit are banking tools in trade, they lack the transferability characteristic of negotiable instruments.