Question

Which one of following will be treated as material alteration

Answer 1

Answer:

Alteration of date, sum payable, time of payment, place of payment, name of parties or rate of interest will be treated as material alteration.

Answer 2

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Which one of the following is ‘material alteration of a negotiable instrument?

(1) Converting an order cheque to bearer cheque

(2) Converting a bearer cheque to order cheque

(3) Crossing of an uncrossed cheque

(4) Writing an amount on a blank cheque

Answer:

The correct answer is option (1) Converting an order cheque to bearer cheque.

Explanation:

Material Alteration-

Making changes to an instrument's material components in an effort to make it more validly built with the intent of that instrument's nature is referred to as material alteration. The term "substantial alteration" refers to any change made to a check's original state, including changes to the date, amount, payee's name, the word "order" that appears following the payee's name, or the endorsement.

Material Alteration is when-

• Date change for the instrument
• Changing the Payable Amount Changing the Payment Date
• Change of Payment Location
• interest rate adjustment or any improvement, if any
• tearing of the instrument's material component
• placing the payment location where the bill is typically accepted
• A New Party is Added to the Instrument.
• adding text to a blank bill of exchange that has been endorsed to create a specific endorsement.

Hence, we can conclude that Converting an order cheque to bearer cheque is a material alteration.

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