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 specified sum to the bearer or a designated party.
- Examples include: Bills of exchange, Promissory notes, and Cheques.
- While a Letter of Credit is a banking tool in trade, it lacks the transferability characteristic of negotiable instruments.