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Discharge of Negotiable Instruments Explained

The document discusses different modes of discharging a negotiable instrument and parties to the instrument. It outlines several ways an instrument can be discharged, including by payment in due course, the party primarily liable becoming the holder, express waiver, cancellation, and as a simple contract. It also discusses how parties can be discharged, such as by payment, cancellation, release, allowing the drawee more than 48 hours to accept, and non-presentment of a cheque within a reasonable time. The document provides examples to illustrate the different modes of discharging an instrument and parties.

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Vibhor Jangra
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28 views11 pages

Discharge of Negotiable Instruments Explained

The document discusses different modes of discharging a negotiable instrument and parties to the instrument. It outlines several ways an instrument can be discharged, including by payment in due course, the party primarily liable becoming the holder, express waiver, cancellation, and as a simple contract. It also discusses how parties can be discharged, such as by payment, cancellation, release, allowing the drawee more than 48 hours to accept, and non-presentment of a cheque within a reasonable time. The document provides examples to illustrate the different modes of discharging an instrument and parties.

Uploaded by

Vibhor Jangra
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Welcome to All

Discharge of a Negotiable Instrument


The term discharge in relation to a negotiable instrument is used in two sense , 1. Discharge of the instrument. 2. Discharge of one or more of parties from liability theorm.

Different Modes of discharge of an Instrument


By payment in due course. By party primarily liable becoming holder. By express waiver. By cancellation. By discharge as a simple cotract.

By payment in due course the

instrument is dischared by the payment made in due course by the party who is primarily liable to pay (the maker and acceptor) , or by a person who is accodateted in case the instrument was made or accepted for his accomodation. Payment of interest --- if the rate of interest is specified in promissory note or bill of exchange interest shall be calculated on the principal amt of specified rate.

By party primarily liable becoming

holder---If the maker of the note or acceptor

of a bill becomes its holder at or after its maturity in his own right the instrument is discharge. By express waiver--- when the holder of a negotiable instrument at or after its maturity absolutely and unconditionally renounces in writing or gives up his right against all the parties to the instrument , the instrument is dischared. The renunication must be writing unless the instrument is delivered upto the party primarily liable.

By Cancellation---where an instrument is

intenionally cancelled by the holder or his agent and the cancellation s apparent, the instrument is discharge. Cancellation may take place by the crossing of signature on the instrument. By discharge as a simple contract--- a negotiable instrument may be dischargeed in the same way as any other contract for the payment of money. Example- by expiry period of limitation.

DISCHARGE OF A PARTY OR PARTIES



By payment. By cancellation By release By allowing drawee more than 48 hours. By non presentment of cheque Cheque apyable to order. Draft drawn by one branch on another. By operation of law.

By allowing drawee more than 48 hours--- if By non presentment of cheque--- where the
the holder of bill of exchange allow the drawee more than 48 hours exclusive of public holidays , to consider wheather he will accept the same,all previous parties not consenting to such allowance are therby discharged. cheque is not presented by the holder for payment within the resonable time of its issue and the drawer suffers actual damage through the delay bcoz of its failure of the bank.

Cheque payable to order--- when the cheque payable


to order purpots to be indorsed by the payeethe banker is discharged by payment [Link] the cheque is originally expressed to be payable to bearer than the drawee is discharged.

By payment--- when the payment is made


on an instrument due course ,both the instrument and parties to it discharged. By cancellation---when the holder of negotiable instrument or his agen cancel the name of the party with intent to discharge him such party nd all subsequent parties By release--- when the holder release any party to the instrument by any method other than cancellation the party so released is discharge from liability.

Draft drawn by one branch on

another--- where any draft drawn by any office of a bank upon another another office of the same bank for a sm of money payable to order on demand prpots to be indorsed by behalf of the payee, the bank is discharged. By operation of law--- by an order of insolvency court , by merger , by lapse of time.

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