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: Recall the definition of negotiable instruments.
- Negotiable instruments are transferable documents that guarantee payment of a specific amount to the bearer or the order of a specified person.
- Examples: Bill of exchange, Promissory notes, Cheques.
- Letter of credit is a banking instrument used in trade, but it is not transferable in the sense of negotiable instruments.