Question 16
Purchase and Sale of GoodsA company which issues a promissory note in lieu of payment for goods purchased
- A.can refuse to pay on due date since it is only a promise
- B.is bound to redeem the note for cash on due date
- C.is not bound to renew the note before payment
- D.can return the goods purchased and refuse to pay.
Show the answer and explanation
Answer: B (is bound to redeem the note for cash on due date)
Explanation
A promissory note is an unconditional promise to pay, so the maker must pay it on the due date.