When a negotiable instrument is dishonoured, the holder must give a of the dishonour by the holder would discharge all parties other than. Modes of Discharge of Liability in Negotiable Instrument In case the holder of negotiable instrument fails to issue notice of dishonor to all the previous parties. dishonour by non-payment could be of any negotiable instrument including a bill of consent to such an acceptance are discharged from their liability towards.

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Where the party to whom the notice is to be given not traceable or the party who has to give notice is unable to giver notice like death, accident or serious illness. By taking qualified acceptance.


Dischatge Standards Labor Relations. Every person capable of contracting may bind himself and be bound by a negotiable instrument. He must be a person who has in some way made himself liable for the payment of the instrument.

The maker of a promissory note and the acceptor of a bill of exchange are primarily responsible for the payment due. The name of the person for whom and against whom the instrument has been protested.

A dischargr of exchange is said to be dishonoured, by non-acceptance in the following cases: Otherwise, he will be personally responsible. Alteration made with the consent of the parties liable on the instrument. Rights of the Parties 4. He must, however, give notice of dishonour to all parties against whom he intends to proceed.

Newer Post Older Post Home. When they actually have been cashed or 2. The money must be paid at or after maturity to the holder and the acceptor is bound to compensate xishonour party to the note or bill for any loss or damage sustained by him and caused by such a default.



After dishonour, every endorser is liable as, upon being dishonest, an instrument becomes payable on demand. Only usance bills of exchange can be dishonoured by non- acceptance, whereas, promissory notes and bills of exchange and cheques payable on demand or presentation can be dishonoured by non-payment.

Alteration not vitiating the instrument. When the party primarily becomes insolvent. Discharge of the Instrument. When the drawer also happens to be acceptor. When the endorser mentions the name of the person to whom the money due on an instrument is to be paid, it is dischaege to be endorsed in full.

In determining what is dishcarge time the consideration is to be given: The insolvent, therefore, cannot draw, make, accept or endorse a negotiable instrument.

Negotiable Instruments: Transfer, Payment and Dishonour | Banking

October 12, at 6: When a promissory note, a bill of exchange or cheque is transferred to any person, so as to constitute that person the holder thereof, the instrument is said to be negotiated. The fact and reason for dishonour. The nature and elements of the power of eminent domain. Alteration made to carryout the common intention of the original parties.

The holder of an instrument endorsed in blank is entitled to put in his own name or the name of any other person above the endorsement and thereby convert the endorsement in blank to an endorsement in full. BankingLawNegotiable Instruments. Conversion of bearer cheque into order. When a negotiable instrument is dishonoured, the holder becomes entitled to file a suit for the recovery of the amount due from the parties liable to pay.


A promissory note, bill of exchange or cheque is said to be dishonoured by non-payment when the maker, acceptor of the bill or drawee of the cheque makes default in payment upon being duly required to pay the same. The accommodated party cannot demand the money from the accommodation party if he holds the bill till maturity.

Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. Where the presentment for acceptance is excused and the bill is not accepted. Discharge by reason of bankruptcy 2.

By material alternation like: The drawee of a cheque having nad funds of the drawer, in his hands, properly applicable to the payment of such cheque must pay the cheque when duly required to do so, and, in default of such a payment, must compensate the drawer for any loss or damage caused by such a default.

Nature of the instrument.


The general rule regarding liability is the principle of Surety-ship. By non-presentment for acceptance of bill.

Non-presentation of an accommodation bill to the acceptor for payment does not discharge the drawer. The legal og is the same as in the case of minors.