Law · Negotiable Instruments Act
An Accommodation Bill is a Negotiable Instrument. Which of the following is true regarding its validity and purpose?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Its only purpose is to defraud creditors, and it is therefore void ab initio.
- 2It is valid only if it is drawn and accepted by a banker.
- 3It is valid as a negotiable instrument but is used to raise temporary finance for mutual benefit.✓
- 4It is invalid as it lacks genuine consideration (trade transaction) and is illegal.
Correct answer
It is valid as a negotiable instrument but is used to raise temporary finance for mutual benefit.
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