Article 13p. 13

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

or negligence. When the cause of delay ceases to operate,

notice must be given with reasonable diligence.

SECTION

114. When

Notice

Need

Not

Be

Given

to

Drawer . — Notice of dishonor is not required to be given

to the drawer in either of the following cases:

(a)Where the drawer and drawee are the same person.

(b)When the drawee is a fictitious person or a person not

having capacity to contract.

(c)When

the

drawer

is

the

person

to

whom

the

instrument is presented for payment.

(d)Where the drawer has no right to expect or require

that the drawee or acceptor will honor the instrument.

(e)Where the drawer has countermanded payment.

SECTION

115. When

Notice

Need

Not

Be

Given

to

Indorser . — Notice of dishonor is not required to be given

to an indorser in either of the following cases:

(a)Where the drawee is a fictitious person or a person not

having capacity to contract, and the indorser was aware

of the fact at the time he indorsed the instrument;

(b)Where

the

indorser

is

the

person to whom the

instrument is presented for payment;

(c)Where the instrument was made or accepted for his

accommodation.

SECTION 116. Notice of Non-payment Where Acceptance

Refused .

—

Where

due

notice

of

dishonor

by

non-acceptance has been given, notice of a subsequent

dishonor by non-payment is not necessary, unless in the

meantime the instrument has been accepted.

SECTION

117. Effect

of

Omission

to

Give

Notice

of

Non-acceptance .

—

An

omission

to

give

notice

of

dishonor by non-acceptance does not prejudice the

rights of a holder in due course subsequent to the

omission.

SECTION 118. When Protest Need Not Be Made ; When

Must Be Made . — Where any negotiable instrument has

been dishonored it may be protested for non-acceptance

or non-payment, as the case may be; but protest is not

required except in the case of foreign bills of exchange.

CHAPTER VIII Discharge of Negotiable

Instruments

SECTION

119. Instrument ;

How

Discharged .

—

A

negotiable instrument is discharged —

(a)By payment in due course by or on behalf of the

principal debtor;

(b)By

payment

in

due

course

by

the

party

accommodated,

where

the

instrument

is

made

or

accepted for accommodation;

(c)By the intentional cancellation thereof by the holder;

(d)By any other act which will discharge a simple contract

for the payment of money;

(e)When the principal debtor becomes the holder of the

instrument at or after maturity in his own right.

SECTION

120. When

Persons

Secondarily

Liable

on ,

Discharged .

—

A

person secondarily liable on the

instrument is discharged —

(a)By any act which discharges the instrument;

(b)By the intentional cancellation of his signature by the

holder;

(c)By the discharge of a prior party;

(d)By a valid tender of payment made by a prior party;

(e)By a release of the principal debtor, unless the holder's

right of recourse against the party secondarily liable is

expressly reserved;

(f)By any agreement binding upon the holder to extend

the time of payment, or to postpone the holder's right to

enforce the instrument, unless made with the assent of

the party secondarily liable, or unless the right of recourse

against such party is expressly reserved. acd

SECTION 121. Right of Party Who Discharges Instrument .

— Where the instrument is paid by a party secondarily

liable thereon, it is not discharged; but the party so

paying it is remitted to his former rights as regard all

prior parties, and he may strike out his own and all

subsequent indorsements, and again negotiate the

instrument, except —

(a)Where it is payable to the order of a third person, and

has been paid by the drawer; and

(b)Where it was made or accepted for accommodation,

and has been paid by the party accommodated.

SECTION 122. Renunciation by Holder . — The holder may

expressly renounce his rights against any party to the

instrument before, at, or after its maturity. An absolute

and unconditional renunciation of his rights against the

principal debtor made at or after the maturity of the

instrument

discharges

the

instrument.

But

a

renunciation does not affect the rights of a holder in due

course without notice. A renunciation must be in writing,

unless the instrument is delivered up to the person

primarily liable thereon.

SECTION

123. Cancellation ;

Unintentional ;

Burden

of

Proof . — A cancellation made unintentionally, or under a

mistake

or

without

the

authority

of

the

holder,

is

inoperative, but where an instrument or any signature

thereon appears to have been cancelled the burden of

proof lies on the party who alleges that the cancellation

was made unintentionally, or under a mistake or without

authority.

SECTION 124. Alteration of Instrument ; Effect of . —

Where

a negotiable instrument is materially altered

without the assent of all parties liable thereon, it is

avoided, except as against a party who has himself made,

authorized, or assented to the alteration, and subsequent

indorsers.

But when an instrument has been materially altered and

is in the hands of a holder in due course, not a party to

the

alteration,

he

may

enforce

payment

thereof

according to its original tenor.

SECTION 125. What Constitutes a Material Alteration . —

Any alteration which changes —

(a)The date;

(b)The sum payable, either for principal or interest;

(c)The time or place of payment;

(d)The number or the relations of the parties;

(e)The medium or currency in which payment is to be

made;

Or which adds a place of payment where no place of

payment is specified, or any other change or addition

which alters the effect of the instrument in any respect, is

a material alteration.

TITLE II Bills of Exchange

CHAPTER IX Form and Interpretation

SECTION 126. Bill of Exchange , Defined . — A bill of

exchange is an unconditional order in writing addressed

by one person to another, signed by the person giving it,

requiring the person to whom it is addressed to pay on

demand or at a fixed or determinable future time a sum

certain in money to order or to bearer.

SECTION 127. Bill Not an Assignment of Funds in Hands

of Drawee . — A bill of itself does not operate as an

assignment of the funds in the hands of the drawee

available for the payment thereof, and the drawee is not

liable on the bill unless and until he accepts the same.

SECTION 128. Bill Addressed to More Than One Drawee .

— A bill may be addressed to two or more drawees jointly,

© Compiled by RGL

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