A payment to be treated as a payment in due course must satisfy the following conditions (i) payment to the person in possession of the cheque (ii) payment as per apparent tenor (iii) payment in good faith without negligence

BANKING GENERAL KNOWLEDGE

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

A payment to be treated as a ‘payment in due course’ must satisfy the following conditions (i) payment to the person in possession of the cheque (ii) payment as per apparent tenor (iii) payment in good faith without negligence

A	(i) and (iii) only
B	(i), (ii) and (iii)
C	(ii) and (iii) only
D	(i) and (ii) only

Explanation:

Detailed explanation-1: -“Payment in due course” means payment in accordance with the apparent tenor of the instrument in good faith and without negligence to any person in possession thereof under circumstances which do not afford a reasonable ground for believing that he is not entitled to receive payment of the amount therein mentioned.

Detailed explanation-2: -For example, a banker makes the payment of a postdated cheque. In this case, payment made by the banker is not in accordance with the apparent tenor of the instrument (i.e. payment made before the date apparent on the instrument).

Detailed explanation-3: -The provisions relating to the liability of parties to negotiable instruments are under section 30 to 32 and 35 to 42 of the Negotiable Instrument Act, 1881.

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