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      Question

      The effect of the words 'not negotiable' on a crossed

      cheque under Section 130 is that the person taking it:
      A Cannot transfer the cheque at all Correct Answer Incorrect Answer
      B Acquires an absolute and unimpeachable title Correct Answer Incorrect Answer
      C Shall not have, and cannot give, a better title than the person from whom he took it Correct Answer Incorrect Answer
      D Becomes a holder in due course automatically Correct Answer Incorrect Answer
      E Is freed from all defects in the transferor's title Correct Answer Incorrect Answer

      Solution

      Section 130 provides that a person taking a cheque crossed generally or specially, bearing the words 'not negotiable', shall not have, and shall not be capable of giving, a better title to the cheque than that which the person from whom he took it had. The cheque remains transferable, but it loses the special quality of negotiability; the transferee's title is only as good as his transferor's, exposing him to prior defects.

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