View Full Version : Q. What are the modes in which a maker, acceptor and endorser of negotiable

08-29-2012, 05:18 AM
Q. What are the modes in which a maker, acceptor and endorser of negotiable instrument is discharged. (2000)(2002)
1. Introduction:
The negotiable instrument act provides different modes in which the individual liability of several parties to a negotiable instrument is discharge.
2. Discharge of parties from liability:
The maker, acceptor and endorser of a negotiable instrument can discharge from their liability.
3. Discharge from instrument:
The term discharge in relation to a negotiable instrument is used in two senses as under.
(i) Discharge of the instrument.
(ii) Discharge of one or more of the parties to the instrument.
I. Discharge of instrument:
An instrument is side to be discharged when all rights under it are extinguished.
After discharge the instrument ceases to be negotiable and even a holder in due course does not acquire any right under it.
II. Discharge of one or more of the parties to the instrument:
If one or more of the parties to the instrument is discharged it continuse to be a negotiable and remaining parties on it will continunes to be liable for it.
Discharge of one or more parties of the instrument does not discharge the instrument.
4. Modes of discharge:
Modes of discharge of negotiable instrument are following.
I. Payment:
The maker, acceptor or endorser respectively of negotiable instrument is discharge from the liability there on to all parties there to, if the instrument is payable to bearer, or has been endorsed in blank, and such maker, acceptor, or endorser makes payment in due course of the amount due thereon.
II. Cancellation:
When the holder of a negotiable instrument deliberately cancels the name of any of the party liable on the instrument to discharge him from liability such party and all subsequent endorsers are discharged from liability.
III. Release:
If holder of an instrument release any party by any method other than cancellation of names the party so released is discharged from liability.
IV. By allowing drawee:
If the holder of a bill allows the drawee more than 48 hours, excluding public holdings, to consider about the acceptance, all previous parties not consenting to such allowance are discharged from liability as the holder.
V. By delay in presentment of cheques:
If the holder of a cheque fails to present it for payment within reasonable time of its issue and in meanwhile the bank fails causing damage to the drawer the drawer is discharged from liability to as against the holder.
VI. Cheque payable to order:
When a cheque is originally expressed to be payable to drawee is discharge by payment in due course to the bearer, notwithstanding that any such endorsement purports to restrict or exclude further negotiation.
VII. Draft by one bank on another:
Where demand draft is drawn by one office of the bank upon another office of the same bank for a sum of money payable to order, the bank is discharged by payment in due course.
VIII. Qualified acceptance:
If the holder of a bill agrees to qualified acceptance without the consent of the prior parties, all the prior are discharged from liability.
IX. By operation of law:
(a) By an odder of the court.
(b) By merger
(c) By laps of time.
X. Material alteration:
Where a negotiable instrument is materially altered with the assent of all parties on the instrument, the instrument is avoided. any alteration by an endorse discharges his endorser from all liabilities to him in respect of the consideration there of.
(i) Alteration of the date of instrument.
(ii) Alteration of the sum payable.
Effect of material alteration:
Any material alteration of a negotiable instrument renders the instrument void.
5. Conclusion:
To conclude I can say that the negotiable instruments act provides different modes of discharge is used in two senses discharge of the instrument and discharge of one or more of the parties to the instrument.