AC1 NC 2031

Iebruary 03 1911

1nL NLGC1IA8LL INS1kUMLN1S LAW

I ICkM AND IN1LkkL1A1ICN

Sect|on 1 lorm of neqotiob/e instruments An |nstrument to be negot|ab|e must conform to
the fo||ow|ng requ|rements
(a) It must be |n wr|t|ng and s|gned by the maker or drawer

(b) Must conta|n an uncond|t|ona| prom|se or order to pay a sum certa|n |n money

(c) Must be payab|e on demand or at a f|xed or determ|nab|e future t|me

(d) Must be payab|e to order or to bearer and

(e) Where the |nstrument |s addressed to a drawee he must be named or otherw|se |nd|cated
there|n w|th reasonab|e certa|nty
Sec 2 whot constitutes certointy os to sum 1he sum payab|e |s a sum certa|n w|th|n the
mean|ng of th|s Act a|though |t |s to be pa|d
(a) w|th |nterest or

(b) by stated |nsta||ments or

(c) by stated |nsta||ments w|th a prov|s|on that upon defau|t |n payment of any |nsta||ment
or of |nterest the who|e sha|| become due or

(d) w|th exchange whether at a f|xed rate or at the current rate or

(e) w|th costs of co||ect|on or an attorneys fee |n case payment sha|| not be made at
matur|ty
Sec 3 when promise is unconditiono/ An unqua||f|ed order or prom|se to pay |s
uncond|t|ona| w|th|n the mean|ng of th|s Act though coup|ed w|th
(a) An |nd|cat|on of a part|cu|ar fund out of wh|ch re|mbursement |s to be made or a
part|cu|ar account to be deb|ted w|th the amount or

(b) A statement of the transact|on wh|ch g|ves r|se to the |nstrument
8ut an order or prom|se to pay out of a part|cu|ar fund |s not uncond|t|ona|chan rob|es v|rtua| |aw
||brary

Sec 4 ueterminob/e future time whot constitutes An |nstrument |s payab|e at a
determ|nab|e future t|me w|th|n the mean|ng of th|s Act wh|ch |s expressed to be payab|e
(a) At a f|xed per|od after date or s|ght or

(b) Cn or before a f|xed or determ|nab|e future t|me spec|f|ed there|n or

(c) Cn or at a f|xed per|od after the occurrence of a spec|f|ed event wh|ch |s certa|n to
happen though the t|me of happen|ng be uncerta|n
An |nstrument payab|e upon a cont|ngency |s not negot|ab|e and the happen|ng of the event
does not cure the defect

Sec S dditiono/ provisions not offectinq neqotiobi/ity An |nstrument wh|ch conta|ns an
order or prom|se to do any act |n add|t|on to the payment of money |s not negot|ab|e 8ut the
negot|ab|e character of an |nstrument otherw|se negot|ab|e |s not affected by a prov|s|on
wh|ch
(a) author|zes the sa|e of co||atera| secur|t|es |n case the |nstrument be not pa|d at matur|ty
or

(b) author|zes a confess|on of [udgment |f the |nstrument be not pa|d at matur|ty or

(c) wa|ves the benef|t of any |aw |ntended for the advantage or protect|on of the ob||gor or

(d) g|ves the ho|der an e|ect|on to requ|re someth|ng to be done |n ||eu of payment of money
8ut noth|ng |n th|s sect|on sha|| va||date any prov|s|on or st|pu|at|on otherw|se |||ega|

Sec 6 Omissions seo/ porticu/or money 1he va||d|ty and negot|ab|e character of an
|nstrument are not affected by the fact that
(a) |t |s not dated or

(b) does not spec|fy the va|ue g|ven or that any va|ue had been g|ven therefor or

(c) does not spec|fy the p|ace where |t |s drawn or the p|ace where |t |s payab|e or

(d) bears a sea| or

(e) des|gnates a part|cu|ar k|nd of current money |n wh|ch payment |s to be made
8ut noth|ng |n th|s sect|on sha|| a|ter or repea| any statute requ|r|ng |n certa|n cases the
nature of the cons|derat|on to be stated |n the |nstrument

Sec 7 when poyob/e on demond An |nstrument |s payab|e on
demand
(a) When |t |s so expressed to be payab|e on demand or at s|ght or on presentat|on or

(b) In wh|ch no t|me for payment |s expressed
Where an |nstrument |s |ssued accepted or |ndorsed when overdue |t |s as regards the
person so |ssu|ng accept|ng or |ndors|ng |t payab|e on demand

Sec 8 when poyob/e to order 1he |nstrument |s payab|e to order where |t |s drawn payab|e
to the order of a spec|f|ed person or to h|m or h|s order It may be drawn payab|e to the order
of
(a) A payee who |s not maker drawer or drawee or

(b) 1he drawer or maker or

(c) 1he drawee or

(d) 1wo or more payees [o|nt|y or

(e) Cne or some of severa| payees or

(f) 1he ho|der of an off|ce for the t|me be|ng
Where the |nstrument |s payab|e to order the payee must be named or otherw|se |nd|cated
there|n w|th reasonab|e certa|nty

Sec 9 when poyob/e to beorer 1he |nstrument |s payab|e to
bearer
(a) When |t |s expressed to be so payab|e or

(b) When |t |s payab|e to a person named there|n or bearer or

(c) When |t |s payab|e to the order of a f|ct|t|ous or nonex|st|ng person and such fact was
known to the person mak|ng |t so payab|e or

(d) When the name of the payee does not purport to be the name of any
person or

(e) When the on|y or |ast |ndorsement |s an |ndorsement |n b|ank
Sec 10 1erms when sufficient 1he |nstrument need not fo||ow the |anguage of th|s Act but
any terms are suff|c|ent wh|ch c|ear|y |nd|cate an |ntent|on to conform to the requ|rements
hereof

Sec 11 uote presumption os to Where the |nstrument or an acceptance or any
|ndorsement thereon |s dated such date |s deemed pr|ma fac|e to be the true date of the
mak|ng draw|ng acceptance or |ndorsement as the case may be chanrob|es |aw

Sec 12 ntedoted ond postdoted 1he |nstrument |s not |nva||d for the reason on|y that |t
|s antedated or postdated prov|ded th|s |s not done for an |||ega| or fraudu|ent purpose 1he
person to whom an |nstrument so dated |s de||vered acqu|res the t|t|e thereto as of the date
of de||very

Sec 13 when dote moy be inserted Where an |nstrument expressed to be payab|e at a
f|xed per|od after date |s |ssued undated or where the acceptance of an |nstrument payab|e
at a f|xed per|od after s|ght |s undated any ho|der may |nsert there|n the true date of |ssue or
acceptance and the |nstrument sha|| be payab|e accord|ng|y 1he |nsert|on of a wrong date
does not avo|d the |nstrument |n the hands of a subsequent ho|der |n due course but as to
h|m the date so |nserted |s to be regarded as the true date

Sec 14 8/onks when moy be fi//ed Where the |nstrument |s want|ng |n any mater|a|
part|cu|ar the person |n possess|on thereof has a pr|ma fac|e author|ty to comp|ete |t by
f||||ng up the b|anks there|n And a s|gnature on a b|ank paper de||vered by the person mak|ng
the s|gnature |n order that the paper may be converted |nto a negot|ab|e |nstrument operates
as a pr|ma fac|e author|ty to f||| |t up as such for any amount In order however that any such
|nstrument when comp|eted may be enforced aga|nst any person who became a party
thereto pr|or to |ts comp|et|on |t must be f|||ed up str|ct|y |n accordance w|th the author|ty
g|ven and w|th|n a reasonab|e t|me 8ut |f any such |nstrument after comp|et|on |s
negot|ated to a ho|der |n due course |t |s va||d and effectua| for a|| purposes |n h|s hands and
he may enforce |t as |f |t had been f|||ed up str|ct|y |n accordance w|th the author|ty g|ven and
w|th|n a reasonab|e t|me

Sec 1S lncomp/ete instrument not de/ivered Where an |ncomp|ete |nstrument has not been
de||vered |t w||| not |f comp|eted and negot|ated w|thout author|ty be a va||d contract |n the
hands of any ho|der as aga|nst any person whose s|gnature was p|aced thereon before
de||very

Sec 16 ue/ivery when effectuo/ when presumed Lvery contract on a negot|ab|e
|nstrument |s |ncomp|ete and revocab|e unt|| de||very of the |nstrument for the purpose of
g|v|ng effect thereto As between |mmed|ate part|es and as regards a remote party other
than a ho|der |n due course the de||very |n order to be effectua| must be made e|ther by or
under the author|ty of the party mak|ng draw|ng accept|ng or |ndors|ng as the case may be
and |n such case the de||very may be shown to have been cond|t|ona| or for a spec|a|
purpose on|y and not for the purpose of transferr|ng the property |n the |nstrument 8ut
where the |nstrument |s |n the hands of a ho|der |n due course a va||d de||very thereof by a||
part|es pr|or to h|m so as to make them ||ab|e to h|m |s conc|us|ve|y presumed And where
the |nstrument |s no |onger |n the possess|on of a party whose s|gnature appears thereon a
va||d and |ntent|ona| de||very by h|m |s presumed unt|| the contrary |s proved

Sec 17 construction where instrument is ombiquous Where the |anguage of the |nstrument
|s amb|guous or there are om|ss|ons there|n the fo||ow|ng ru|es of construct|on app|y
(a) Where the sum payab|e |s expressed |n words and a|so |n f|gures and there |s a
d|screpancy between the two the sum denoted by the words |s the sum payab|e but |f the
words are amb|guous or uncerta|n reference may be had to the f|gures to f|x the amount

(b) Where the |nstrument prov|des for the payment of |nterest w|thout spec|fy|ng the date
from wh|ch |nterest |s to run the |nterest runs from the date of the |nstrument and |f the
|nstrument |s undated from the |ssue thereof

(c) Where the |nstrument |s not dated |t w||| be cons|dered to be dated as of the t|me |t was
|ssued

(d) Where there |s a conf||ct between the wr|tten and pr|nted prov|s|ons of the |nstrument
the wr|tten prov|s|ons preva||

(e) Where the |nstrument |s so amb|guous that there |s doubt whether |t |s a b||| or note the
ho|der may treat |t as e|ther at h|s e|ect|on

(f) Where a s|gnature |s so p|aced upon the |nstrument that |t |s not c|ear |n what capac|ty the
person mak|ng the same |ntended to s|gn he |s to be deemed an |ndorser

(g) Where an |nstrument conta|n|ng the word l promise to poy |s s|gned by two or more
persons they are deemed to be [o|nt|y and severa||y ||ab|e thereon

Sec 18 Liobi/ity of person siqninq in trode or ossumed nome No person |s ||ab|e on the
|nstrument whose s|gnature does not appear thereon except as here|n otherw|se express|y
prov|ded 8ut one who s|gns |n a trade or assumed name w||| be ||ab|e to the same extent as
|f he had s|gned |n h|s own name

Sec 19 5iqnoture by oqent outhority how shown 1he s|gnature of any party may be made
by a du|y author|zed agent No part|cu|ar form of appo|ntment |s necessary for th|s purpose
and the author|ty of the agent may be estab||shed as |n other cases of agency

Sec 20 Liobi/ity of person siqninq os oqent ond so forth Where the |nstrument conta|ns or
a person adds to h|s s|gnature words |nd|cat|ng that he s|gns for or on beha|f of a pr|nc|pa| or
|n a representat|ve capac|ty he |s not ||ab|e on the |nstrument |f he was du|y author|zed but
the mere add|t|on of words descr|b|ng h|m as an agent or as f||||ng a representat|ve
character w|thout d|sc|os|ng h|s pr|nc|pa| does not exempt h|m from persona| ||ab|||ty

Sec 21 5iqnoture by procurotion effect of A s|gnature by procurotion operates as not|ce
that the agent has but a ||m|ted author|ty to s|gn and the pr|nc|pa| |s bound on|y |n case the
agent |n so s|gn|ng acted w|th|n the actua| ||m|ts of h|s author|ty

Sec 22 ffect of indorsement by infont or corporotion 1he |ndorsement or ass|gnment of
the |nstrument by a corporat|on or by an |nfant passes the property there|n notw|thstand|ng
that from want of capac|ty the corporat|on or |nfant may |ncur no ||ab|||ty thereon

Sec 23 lorqed siqnoture effect of When a s|gnature |s forged or made w|thout the
author|ty of the person whose s|gnature |t purports to be |t |s who||y |noperat|ve and no
r|ght to reta|n the |nstrument or to g|ve a d|scharge therefor or to enforce payment thereof
aga|nst any party thereto can be acqu|red through or under such s|gnature un|ess the party
aga|nst whom |t |s sought to enforce such r|ght |s prec|uded from sett|ng up the forgery or
want of author|ty

II CCNSIDLkA1ICN

Sec 24 9resumption of considerotion Lvery negot|ab|e |nstrument |s deemed primo focie to
have been |ssued for a va|uab|e cons|derat|on and every person whose s|gnature appears
thereon to have become a party thereto for va|ue

Sec 2S vo/ue whot constitutes Va|ue |s any cons|derat|on suff|c|ent to support a s|mp|e
contract An antecedent or preex|st|ng debt const|tutes va|ue and |s deemed such whether
the |nstrument |s payab|e on demand or at a future t|me

Sec 26 whot constitutes ho/der for vo/ue Where va|ue has at any t|me been g|ven for the
|nstrument the ho|der |s deemed a ho|der for va|ue |n respect to a|| part|es who become such
pr|or to that t|me
Sec 27 When ||en on |nstrument const|tutes ho|der for va|ue Where the ho|der has a ||en
on the |nstrument ar|s|ng e|ther from contract or by |mp||cat|on of |aw he |s deemed a ho|der
for va|ue to the extent of h|s ||en

Sec 28 ffect of wont of considerotion Absence or fa||ure of cons|derat|on |s a matter of
defense as aga|nst any person not a ho|der |n due course and part|a| fa||ure of cons|derat|on
|s a defense pro tanto whether the fa||ure |s an ascerta|ned and ||qu|dated amount or
otherw|se

Sec 29 Liobi/ity of occommodotion porty An accommodat|on party |s one who has s|gned
the |nstrument as maker drawer acceptor or |ndorser w|thout rece|v|ng va|ue therefor and
for the purpose of |end|ng h|s name to some other person Such a person |s ||ab|e on the
|nstrument to a ho|der for va|ue notw|thstand|ng such ho|der at the t|me of tak|ng the
|nstrument knew h|m to be on|y an accommodat|on party

III NLGC1IA1ICN

Sec 30 whot constitutes neqotiotion An |nstrument |s negot|ated when |t |s transferred
from one person to another |n such manner as to const|tute the transferee the ho|der
thereof If payab|e to bearer |t |s negot|ated by de||very |f payab|e to order |t |s negot|ated
by the |ndorsement of the ho|der and comp|eted by de||very

Sec 31 lndorsement how mode 1he |ndorsement must be wr|tten on the |nstrument |tse|f
or upon a paper attached thereto 1he s|gnature of the |ndorser w|thout add|t|ona| words |s
a suff|c|ent |ndorsement

Sec 32 lndorsement must be of entire instrument 1he |ndorsement must be an
|ndorsement of the ent|re |nstrument An |ndorsement wh|ch purports to transfer to the
|ndorsee a part on|y of the amount payab|e or wh|ch purports to transfer the |nstrument to
two or more |ndorsees severa||y does not operate as a negot|at|on of the |nstrument 8ut
where the |nstrument has been pa|d |n part |t may be |ndorsed as to the res|due

Sec 33 inds of indorsement An |ndorsement may be e|ther spec|a| or |n b|ank and |t may
a|so be e|ther restr|ct|ve or qua||f|ed or cond|t|ona|

Sec 34 5pecio/ indorsement indorsement in b/onk A spec|a| |ndorsement spec|f|es the
person to whom or to whose order the |nstrument |s to be payab|e and the |ndorsement of
such |ndorsee |s necessary to the further negot|at|on of the |nstrument An |ndorsement |n
b|ank spec|f|es no |ndorsee and an |nstrument so |ndorsed |s payab|e to bearer and may be
negot|ated by de||very

Sec 3S 8/onk indorsement how chonqed to specio/ indorsement 1he ho|der may convert a
b|ank |ndorsement |nto a spec|a| |ndorsement by wr|t|ng over the s|gnature of the |ndorser |n
b|ank any contract cons|stent w|th the character of the |ndorsement

Sec 36 when indorsement restrictive An |ndorsement |s restr|ct|ve wh|ch e|ther
(a) roh|b|ts the further negot|at|on of the |nstrument or

(b) Const|tutes the |ndorsee the agent of the |ndorser or

(c) Vests the t|t|e |n the |ndorsee |n trust for or to the use of some other persons
8ut the mere absence of words |mp|y|ng power to negot|ate does not make an |ndorsement
restr|ct|ve

Sec 37 ffect of restrictive indorsement riqhts of indorsee A restr|ct|ve |ndorsement
confers upon the |ndorsee the r|ght
(a) to rece|ve payment of the |nstrument

(b) to br|ng any act|on thereon that the |ndorser cou|d br|ng

(c) to transfer h|s r|ghts as such |ndorsee where the form of the |ndorsement author|zes h|m
to do so
8ut a|| subsequent |ndorsees acqu|re on|y the t|t|e of the f|rst |ndorsee under the restr|ct|ve
|ndorsement

Sec 38 uo/ified indorsement A qua||f|ed |ndorsement const|tutes the |ndorser a mere
ass|gnor of the t|t|e to the |nstrument It may be made by add|ng to the |ndorsers s|gnature
the words w|thout recourse or any words of s|m||ar |mport Such an |ndorsement does not
|mpa|r the negot|ab|e character of the |nstrument

Sec 39 conditiono/ indorsement Where an |ndorsement |s cond|t|ona| the party requ|red
to pay the |nstrument may d|sregard the cond|t|on and make payment to the |ndorsee or h|s
transferee whether the cond|t|on has been fu|f|||ed or not 8ut any person to whom an
|nstrument so |ndorsed |s negot|ated w||| ho|d the same or the proceeds thereof sub[ect to
the r|ghts of the person |ndors|ng cond|t|ona||y

Sec 40 lndorsement of instrument poyob/e to beorer Where an |nstrument payab|e to
bearer |s |ndorsed spec|a||y |t may neverthe|ess be further negot|ated by de||very but the
person |ndors|ng spec|a||y |s ||ab|e as |ndorser to on|y such ho|ders as make t|t|e through h|s
|ndorsement

Sec 41 lndorsement where poyob/e to two or more persons Where an |nstrument |s
payab|e to the order of two or more payees or |ndorsees who are not partners a|| must
|ndorse un|ess the one |ndors|ng has author|ty to |ndorse for the others

Sec 42 ffect of instrument drown or indorsed to o person os
coshier Where an |nstrument |s drawn or |ndorsed to a person as coshier or other f|sca|
off|cer of a bank or corporat|on |t |s deemed pr|ma fac|e to be payab|e to the bank or
corporat|on of wh|ch he |s such off|cer and may be negot|ated by e|ther the |ndorsement of
the bank or corporat|on or the |ndorsement of the off|cer

Sec 43 lndorsement where nome is misspe//ed ond so forth Where the name of a payee or
|ndorsee |s wrong|y des|gnated or m|sspe||ed he may |ndorse the |nstrument as there|n
descr|bed add|ng |f he th|nks f|t h|s proper s|gnature

Sec 44 lndorsement in representotive copocity Where any person |s under ob||gat|on to
|ndorse |n a representat|ve capac|ty he may |ndorse |n such terms as to negat|ve persona|
||ab|||ty rob|es v|rtua| |aw ||brary

Sec 4S 1ime of indorsement presumption Lxcept where an |ndorsement bears date after
the matur|ty of the |nstrument every negot|at|on |s deemed pr|ma fac|e to have been
effected before the |nstrument was overdue

Sec 46 9/oce of indorsement presumption Lxcept where the contrary appears every
|ndorsement |s presumed pr|ma fac|e to have been made at the p|ace where the |nstrument |s
dated

Sec 47 continuotion of neqotiob/e chorocter An |nstrument negot|ab|e |n |ts or|g|n
cont|nues to be negot|ab|e unt|| |t has been restr|ct|ve|y |ndorsed or d|scharged by payment
or otherw|se

Sec 48 5trikinq out indorsement 1he ho|der may at any t|me str|ke out any |ndorsement
wh|ch |s not necessary to h|s t|t|e 1he |ndorser whose |ndorsement |s struck out and a||
|ndorsers subsequent to h|m are thereby re||eved from ||ab|||ty on the |nstrument

Sec 49 1ronsfer without indorsement effect of Where the ho|der of an |nstrument payab|e
to h|s order transfers |t for va|ue w|thout |ndors|ng |t the transfer vests |n the transferee such
t|t|e as the transferor had there|n and the transferee acqu|res |n add|t|on the r|ght to have
the |ndorsement of the transferor 8ut for the purpose of determ|n|ng whether the transferee
|s a ho|der |n due course the negot|at|on takes effect as of the t|me when the |ndorsement |s
actua||y made

Sec S0 when prior porty moy neqotiote instrument Where an |nstrument |s negot|ated
back to a pr|or party such party may sub[ect to the prov|s|ons of th|s Act re|ssue and further
negot|ab|e the same 8ut he |s not ent|t|ed to enforce payment thereof aga|nst any
|nterven|ng party to whom he was persona||y ||ab|e

IV kIGn1S CI 1nL nCLDLk

Sec S1 kiqht of ho/der to sue poyment 1he ho|der of a negot|ab|e |nstrument may to sue
thereon |n h|s own name and payment to h|m |n due course d|scharges the |nstrument

Sec S2 whot constitutes o ho/der in due course A ho|der |n due course |s a ho|der who has
taken the |nstrument under the fo||ow|ng cond|t|ons
(a) 1hat |t |s comp|ete and regu|ar upon |ts face

(b) 1hat he became the ho|der of |t before |t was overdue and w|thout not|ce that |t has been
prev|ous|y d|shonored |f such was the fact

(c) 1hat he took |t |n good fa|th and for va|ue

(d) 1hat at the t|me |t was negot|ated to h|m he had no not|ce of any |nf|rm|ty |n the
|nstrument or defect |n the t|t|e of the person negot|at|ng |t
Sec S3 when person not deemed ho/der in due course Where an |nstrument payab|e on
demand |s negot|ated on an unreasonab|e |ength of t|me after |ts |ssue the ho|der |s not
deemed a ho|der |n due course

Sec S4 Notice before fu// omount is poid Where the transferee rece|ves not|ce of any
|nf|rm|ty |n the |nstrument or defect |n the t|t|e of the person negot|at|ng the same before he
has pa|d the fu|| amount agreed to be pa|d therefor he w||| be deemed a ho|der |n due course
on|y to the extent of the amount therefore pa|d by h|m

Sec SS when tit/e defective 1he t|t|e of a person who negot|ates an |nstrument |s defect|ve
w|th|n the mean|ng of th|s Act when he obta|ned the |nstrument or any s|gnature thereto by
fraud duress or force and fear or other un|awfu| means or for an |||ega| cons|derat|on or
when he negot|ates |t |n breach of fa|th or under such c|rcumstances as amount to a fraud

Sec S6 whot constitutes notice of defect 1o const|tutes not|ce of an |nf|rm|ty |n the
|nstrument or defect |n the t|t|e of the person negot|at|ng the same the person to whom |t |s
negot|ated must have had actua| know|edge of the |nf|rm|ty or defect or know|edge of such
facts that h|s act|on |n tak|ng the |nstrument amounted to bad fa|th

Sec S7 kiqhts of ho/der in due course A ho|der |n due course ho|ds the |nstrument free
from any defect of t|t|e of pr|or part|es and free from defenses ava||ab|e to pr|or part|es
among themse|ves and may enforce payment of the |nstrument for the fu|| amount thereof
aga|nst a|| part|es ||ab|e thereon rob|es v|rtua| |aw ||brary

Sec S8 when subject to oriqino/ defense In the hands of any ho|der other than a ho|der |n
due course a negot|ab|e |nstrument |s sub[ect to the same defenses as |f |t were non
negot|ab|e 8ut a ho|der who der|ves h|s t|t|e through a ho|der |n due course and who |s not
h|mse|f a party to any fraud or |||ega||ty affect|ng the |nstrument has a|| the r|ghts of such
former ho|der |n respect of a|| part|es pr|or to the |atter

Sec S9 who is deemed ho/der in due course Lvery ho|der |s deemed pr|ma fac|e to be a
ho|der |n due course but when |t |s shown that the t|t|e of any person who has negot|ated
the |nstrument was defect|ve the burden |s on the ho|der to prove that he or some person
under whom he c|a|ms acqu|red the t|t|e as ho|der |n due course 8ut the |astment|oned ru|e
does not app|y |n favor of a party who became bound on the |nstrument pr|or to the
acqu|s|t|on of such defect|ve t|t|e

V LIA8ILI1ILS CI Ak1ILS

Sec 60 Liobi/ity of moker 1he maker of a negot|ab|e |nstrument by mak|ng |t engages that
he w||| pay |t accord|ng to |ts tenor and adm|ts the ex|stence of the payee and h|s then
capac|ty to |ndorse

Sec 61 Liobi/ity of drower 1he drawer by draw|ng the |nstrument adm|ts the ex|stence of
the payee and h|s then capac|ty to |ndorse and engages that on due presentment the
|nstrument w||| be accepted or pa|d or both accord|ng to |ts tenor and that |f |t be
d|shonored and the necessary proceed|ngs on d|shonor be du|y taken he w||| pay the amount
thereof to the ho|der or to any subsequent |ndorser who may be compe||ed to pay |t 8ut the
drawer may |nsert |n the |nstrument an express st|pu|at|on negat|v|ng or ||m|t|ng h|s own
||ab|||ty to the ho|der

Sec 62 Liobi/ity of occeptor 1he acceptor by accept|ng the |nstrument engages that he w|||
pay |t accord|ng to the tenor of h|s acceptance and adm|ts
(a) 1he ex|stence of the drawer the genu|neness of h|s s|gnature and h|s capac|ty and
author|ty to draw the |nstrument and

(b) 1he ex|stence of the payee and h|s then capac|ty to |ndorse
Sec 63 when o person deemed indorser A person p|ac|ng h|s s|gnature upon an |nstrument
otherw|se than as maker drawer or acceptor |s deemed to be |ndorser un|ess he c|ear|y
|nd|cates by appropr|ate words h|s |ntent|on to be bound |n some other capac|ty

Sec 64 Liobi/ity of irrequ/or indorser Where a person not otherw|se a party to an
|nstrument p|aces thereon h|s s|gnature |n b|ank before de||very he |s ||ab|e as |ndorser |n
accordance w|th the fo||ow|ng ru|es
(a) If the |nstrument |s payab|e to the order of a th|rd person he |s ||ab|e to the payee and to
a|| subsequent part|es

(b) If the |nstrument |s payab|e to the order of the maker or drawer or |s payab|e to bearer
he |s ||ab|e to a|| part|es subsequent to the maker or drawer

(c) If he s|gns for the accommodat|on of the payee he |s ||ab|e to a|| part|es subsequent to the
payee
Sec 6S worronty where neqotiotion by de/ivery ond so forth Lvery person negot|at|ng an
|nstrument by de||very or by a qua||f|ed |ndorsement warrants
(a) 1hat the |nstrument |s genu|ne and |n a|| respects what |t purports to be

(b) 1hat he has a good t|t|e to |t

(c) 1hat a|| pr|or part|es had capac|ty to contract

(d) 1hat he has no know|edge of any fact wh|ch wou|d |mpa|r the va||d|ty of the |nstrument or
render |t va|ue|ess
8ut when the negot|at|on |s by de||very on|y the warranty extends |n favor of no ho|der other
than the |mmed|ate transferee

1he prov|s|ons of subd|v|s|on (c) of th|s sect|on do not app|y to a person negot|at|ng pub||c or
corporat|on secur|t|es other than b|||s and notes

Sec 66 Liobi/ity of qenero/ indorser Lvery |ndorser who |ndorses w|thout qua||f|cat|on
warrants to a|| subsequent ho|ders |n due course
(a) 1he matters and th|ngs ment|oned |n subd|v|s|ons (a) (b) and (c) of the next preced|ng
sect|on and

(b) 1hat the |nstrument |s at the t|me of h|s |ndorsement va||d and subs|st|ng
And |n add|t|on he engages that on due presentment |t sha|| be accepted or pa|d or both
as the case may be accord|ng to |ts tenor and that |f |t be d|shonored and the necessary
proceed|ngs on d|shonor be du|y taken he w||| pay the amount thereof to the ho|der or to
any subsequent |ndorser who may be compe||ed to pay |t

Sec 67 Liobi/ity of indorser where poper neqotiob/e by de/ivery Where a person p|aces h|s
|ndorsement on an |nstrument negot|ab|e by de||very he |ncurs a|| the ||ab|||ty of an |ndorser

Sec 68 Order in which indorsers ore /iob/e As respect one another |ndorsers are ||ab|e
primo focie |n the order |n wh|ch they |ndorse but ev|dence |s adm|ss|b|e to show that as
between or among themse|ves they have agreed otherw|se Io|nt payees or [o|nt |ndorsees
who |ndorse are deemed to |ndorse [o|nt|y and severa||y rob|es v|rtua| |aw ||brary

Sec 69 Liobi/ity of on oqent or broker Where a broker or other agent negot|ates an
|nstrument w|thout |ndorsement he |ncurs a|| the ||ab|||t|es prescr|bed by Sect|on S|xtyf|ve
of th|s Act un|ess he d|sc|oses the name of h|s pr|nc|pa| and the fact that he |s act|ng on|y as
agent

VI kLSLN1A1ICN ICk AMLN1

Sec 70 ffect of wont of demond on principo/ debtor resentment for payment |s not
necessary |n order to charge the person pr|mar||y ||ab|e on the |nstrument but |f the
|nstrument |s by |ts terms payab|e at a spec|a| p|ace and he |s ab|e and w||||ng to pay |t there
at matur|ty such ab|||ty and w||||ngness are equ|va|ent to a tender of payment upon h|s part
8ut except as here|n otherw|se prov|ded presentment for payment |s necessary |n order to
charge the drawer and |ndorsers

Sec 71 9resentment where instrument is not poyob/e on demond ond where poyob/e on
demond Where the |nstrument |s not payab|e on demand presentment must be made on
the day |t fa||s due Where |t |s payab|e on demand presentment must be made w|th|n a
reasonab|e t|me after |ts |ssue except that |n the case of a b||| of exchange presentment for
payment w||| be suff|c|ent |f made w|th|n a reasonab|e t|me after the |ast negot|at|on thereof

Sec 72 whot constitutes o sufficient presentment resentment for payment to be
suff|c|ent must be made
(a) 8y the ho|der or by some person author|zed to rece|ve payment on h|s beha|f

(b) At a reasonab|e hour on a bus|ness day

(c) At a proper p|ace as here|n def|ned

(d) 1o the person pr|mar||y ||ab|e on the |nstrument or |f he |s absent or |naccess|b|e to any
person found at the p|ace where the presentment |s made
Sec 73 9/oce of presentment resentment for payment |s made at the proper p|ace
(a) Where a p|ace of payment |s spec|f|ed |n the |nstrument and |t |s there presented

(b) Where no p|ace of payment |s spec|f|ed but the address of the person to make payment |s
g|ven |n the |nstrument and |t |s there presented

(c) Where no p|ace of payment |s spec|f|ed and no address |s g|ven and the |nstrument |s
presented at the usua| p|ace of bus|ness or res|dence of the person to make payment

(d) In any other case |f presented to the person to make payment wherever he can be found
or |f presented at h|s |ast known p|ace of bus|ness or res|dence
Sec 74 lnstrument must be exhibited 1he |nstrument must be exh|b|ted to the person from
whom payment |s demanded and when |t |s pa|d must be de||vered up to the party pay|ng |t

Sec 7S 9resentment where instrument poyob/e ot bonk Where the |nstrument |s payab|e at
a bank presentment for payment must be made dur|ng bank|ng hours un|ess the person to
make payment has no funds there to meet |t at any t|me dur|ng the day |n wh|ch case
presentment at any hour before the bank |s c|osed on that day |s suff|c|ent

Sec 76 9resentment where principo/ debtor is deod Where the person pr|mar||y ||ab|e on
the |nstrument |s dead and no p|ace of payment |s spec|f|ed presentment for payment must
be made to h|s persona| representat|ve |f such there be and |f w|th the exerc|se of
reasonab|e d|||gence he can be found

Sec 77 9resentment to persons /iob/e os portners Where the persons pr|mar||y ||ab|e on the
|nstrument are ||ab|e as partners and no p|ace of payment |s spec|f|ed presentment for
payment may be made to any one of them even though there has been a d|sso|ut|on of the
f|rm

Sec 78 9resentment to joint debtors Where there are severa| persons not partners
pr|mar||y ||ab|e on the |nstrument and no p|ace of payment |s spec|f|ed presentment must be
made to them a||

Sec 79 when presentment not required to chorqe the drower resentment for payment |s
not requ|red |n order to charge the drawer where he has no r|ght to expect or requ|re that
the drawee or acceptor w||| pay the |nstrument

Sec 80 when presentment not required to chorqe the indorser resentment |s not requ|red
|n order to charge an |ndorser where the |nstrument was made or accepted for h|s
accommodat|on and he has no reason to expect that the |nstrument w||| be pa|d |f presented

Sec 81 when de/oy in mokinq presentment is excused De|ay |n mak|ng presentment for
payment |s excused when the de|ay |s caused by c|rcumstances beyond the contro| of the
ho|der and not |mputab|e to h|s defau|t m|sconduct or neg||gence When the cause of de|ay
ceases to operate presentment must be made w|th reasonab|e d|||gence

Sec 82 when presentment for poyment is excused resentment for payment |s excused
(a) Where after the exerc|se of reasonab|e d|||gence presentment as requ|red by th|s Act
cannot be made

(b) Where the drawee |s a f|ct|t|ous person

(c) 8y wa|ver of presentment express or |mp||ed
Sec 83 when instrument dishonored by nonpoyment 1he |nstrument |s d|shonored by
nonpayment when
(a) It |s du|y presented for payment and payment |s refused or cannot be obta|ned or

(b) resentment |s excused and the |nstrument |s overdue and unpa|d
Sec 84 Liobi/ity of person secondori/y /iob/e when instrument dishonored Sub[ect to the
prov|s|ons of th|s Act when the |nstrument |s d|shonored by nonpayment an |mmed|ate
r|ght of recourse to a|| part|es secondar||y ||ab|e thereon accrues to the ho|der rob|es v|rtua| |aw
||brary

Sec 8S 1ime of moturity Lvery negot|ab|e |nstrument |s payab|e at the t|me f|xed there|n
w|thout grace When the day of matur|ty fa||s upon Sunday or a ho||day the |nstruments
fa|||ng due or becom|ng payab|e on Saturday are to be presented for payment on the next
succeed|ng bus|ness day except that |nstruments payab|e on demand may at the opt|on of
the ho|der be presented for payment before twe|ve oc|ock noon on Saturday when that
ent|re day |s not a ho||day

Sec 86 1ime how computed When the |nstrument |s payab|e at a f|xed per|od after date
after s|ght or after that happen|ng of a spec|f|ed event the t|me of payment |s determ|ned by
exc|ud|ng the day from wh|ch the t|me |s to beg|n to run and by |nc|ud|ng the date of
payment

Sec 87 ku/e where instrument poyob/e ot bonk Where the |nstrument |s made payab|e at a
bank |t |s equ|va|ent to an order to the bank to pay the same for the account of the pr|nc|pa|
debtor thereon

Sec 88 whot constitutes poyment in due course ayment |s made |n due course when |t |s
made at or after the matur|ty of the payment to the ho|der thereof |n good fa|th and w|thout
not|ce that h|s t|t|e |s defect|ve

VII NC1ICL CI DISnCNCk

Sec 89 1o whom notice of dishonor must be qiven Lxcept as here|n otherw|se prov|ded
when a negot|ab|e |nstrument has been d|shonored by nonacceptance or nonpayment
not|ce of d|shonor must be g|ven to the drawer and to each |ndorser and any drawer or
|ndorser to whom such not|ce |s not g|ven |s d|scharged

Sec 90 8y whom qiven 1he not|ce may be g|ven by or on beha|f of the ho|der or by or on
beha|f of any party to the |nstrument who m|ght be compe||ed to pay |t to the ho|der and
who upon tak|ng |t up wou|d have a r|ght to re|mbursement from the party to whom the
not|ce |s g|ven

Sec 91 Notice qiven by oqent Not|ce of d|shonor may be g|ven by any agent e|ther |n h|s
own name or |n the name of any party ent|t|ed to g|ven not|ce whether that party be h|s
pr|nc|pa| or not

Sec 92 ffect of notice on beho/f of ho/der Where not|ce |s g|ven by or on beha|f of the
ho|der |t |nures to the benef|t of a|| subsequent ho|ders and a|| pr|or part|es who have a r|ght
of recourse aga|nst the party to whom |t |s g|ven

Sec 93 ffect where notice is qiven by porty entit/ed thereto Where not|ce |s g|ven by or on
beha|f of a party ent|t|ed to g|ve not|ce |t |nures to the benef|t of the ho|der and a|| part|es
subsequent to the party to whom not|ce |s g|ven chanrob|es |aw

Sec 94 when oqent moy qive notice Where the |nstrument has been d|shonored |n the
hands of an agent he may e|ther h|mse|f g|ve not|ce to the part|es ||ab|e thereon or he may
g|ve not|ce to h|s pr|nc|pa| If he g|ves not|ce to h|s pr|nc|pa| he must do so w|th|n the same
t|me as |f he were the ho|der and the pr|nc|pa| upon the rece|pt of such not|ce has h|mse|f
the same t|me for g|v|ng not|ce as |f the agent had been an |ndependent ho|der

Sec 9S when notice sufficient A wr|tten not|ce need not be s|gned and an |nsuff|c|ent
wr|tten not|ce may be supp|emented and va||dated by verba| commun|cat|on A
m|sdescr|pt|on of the |nstrument does not v|t|ate the not|ce un|ess the party to whom the
not|ce |s g|ven |s |n fact m|s|ed thereby

Sec 96 lorm of notice 1he not|ce may be |n wr|t|ng or mere|y ora| and may be g|ven |n any
terms wh|ch suff|c|ent|y |dent|fy the |nstrument and |nd|cate that |t has been d|shonored by
nonacceptance or nonpayment It may |n a|| cases be g|ven by de||ver|ng |t persona||y or
through the ma||s

Sec 97 1o whom notice moy be qiven Not|ce of d|shonor may be g|ven e|ther to the party
h|mse|f or to h|s agent |n that beha|f

Sec 98 Notice where porty is deod When any party |s dead and h|s death |s known to the
party g|v|ng not|ce the not|ce must be g|ven to a persona| representat|ve |f there be one
and |f w|th reasonab|e d|||gence he can be found If there be no persona| representat|ve
not|ce may be sent to the |ast res|dence or |ast p|ace of bus|ness of the deceased

Sec 99 Notice to portners Where the part|es to be not|f|ed are partners not|ce to any one
partner |s not|ce to the f|rm even though there has been a d|sso|ut|on

Sec 100 Notice to persons joint/y /iob/e Not|ce to [o|nt persons who are not partners must
be g|ven to each of them un|ess one of them has author|ty to rece|ve such not|ce for the
others

Sec 101 Notice to bonkrupt Where a party has been ad[udged a bankrupt or an |nso|vent
or has made an ass|gnment for the benef|t of cred|tors not|ce may be g|ven e|ther to the
party h|mse|f or to h|s trustee or ass|gnee

Sec 102 1ime within which notice must be qiven Not|ce may be g|ven as soon as the
|nstrument |s d|shonored and un|ess de|ay |s excused as here|nafter prov|ded must be g|ven
w|th|n the t|me f|xed by th|s Act

Sec 103 where porties reside in some p/oce Where the person g|v|ng and the person to
rece|ve not|ce res|de |n the same p|ace not|ce must be g|ven w|th|n the fo||ow|ng t|mes
(a) If g|ven at the p|ace of bus|ness of the person to rece|ve not|ce |t must be g|ven before
the c|ose of bus|ness hours on the day fo||ow|ng

(b) If g|ven at h|s res|dence |t must be g|ven before the usua| hours of rest on the day
fo||ow|ng

(c) If sent by ma|| |t must be depos|ted |n the post off|ce |n t|me to reach h|m |n usua| course
on the day fo||ow|ng
Sec 104 where porties reside in different p/oces Where the person g|v|ng and the person to
rece|ve not|ce res|de |n d|fferent p|aces the not|ce must be g|ven w|th|n the fo||ow|ng t|mes
(a) If sent by ma|| |t must be depos|ted |n the post off|ce |n t|me to go by ma|| the day
fo||ow|ng the day of d|shonor or |f there be no ma|| at a conven|ent hour on |ast day by the
next ma|| thereafter

(b) If g|ven otherw|se than through the post off|ce then w|th|n the t|me that not|ce wou|d
have been rece|ved |n due course of ma|| |f |t had been depos|ted |n the post off|ce w|th|n
the t|me spec|f|ed |n the |ast subd|v|s|on
Sec 10S when sender deemed to hove qiven due notice Where not|ce of d|shonor |s du|y
addressed and depos|ted |n the post off|ce the sender |s deemed to have g|ven due not|ce
notw|thstand|ng any m|scarr|age |n the ma||s

Sec 106 ueposit in post office whot constitutes Not|ce |s deemed to have been depos|ted
|n the postoff|ce when depos|ted |n any branch post off|ce or |n any |etter box under the
contro| of the postoff|ce department

Sec 107 Notice to subsequent porty time of Where a party rece|ves not|ce of d|shonor he
has after the rece|pt of such not|ce the same t|me for g|v|ng not|ce to antecedent part|es
that the ho|der has after the d|shonor

Sec 108 where notice must be sent Where a party has added an address to h|s s|gnature
not|ce of d|shonor must be sent to that address but |f he has not g|ven such address then
the not|ce must be sent as fo||ows
(a) L|ther to the postoff|ce nearest to h|s p|ace of res|dence or to the postoff|ce where he |s
accustomed to rece|ve h|s |etters or

(b) If he ||ves |n one p|ace and has h|s p|ace of bus|ness |n another not|ce may be sent to
e|ther p|ace or

(c) If he |s so[ourn|ng |n another p|ace not|ce may be sent to the p|ace where he |s so
so[ourn|ng
8ut where the not|ce |s actua||y rece|ved by the party w|th|n the t|me spec|f|ed |n th|s Act |t
w||| be suff|c|ent though not sent |n accordance w|th the requ|rement of th|s sect|on

Sec 109 woiver of notice Not|ce of d|shonor may be wa|ved e|ther before the t|me of
g|v|ng not|ce has arr|ved or after the om|ss|on to g|ve due not|ce and the wa|ver may be
expressed or |mp||ed

Sec 110 whom offected by woiver Where the wa|ver |s embod|ed |n the |nstrument |tse|f
|t |s b|nd|ng upon a|| part|es but where |t |s wr|tten above the s|gnature of an |ndorser |t
b|nds h|m on|y

Sec 111 woiver of protest A wa|ver of protest whether |n the case of a fore|gn b||| of
exchange or other negot|ab|e |nstrument |s deemed to be a wa|ver not on|y of a forma|
protest but a|so of presentment and not|ce of d|shonor

Sec 112 when notice is dispensed with Not|ce of d|shonor |s d|spensed w|th when after
the exerc|se of reasonab|e d|||gence |t cannot be g|ven to or does not reach the part|es
sought to be charged

Sec 113 ue/oy in qivinq notice how excused De|ay |n g|v|ng not|ce of d|shonor |s excused
when the de|ay |s caused by c|rcumstances beyond the contro| of the ho|der and not
|mputab|e to h|s defau|t m|sconduct or neg||gence When the cause of de|ay ceases to
operate not|ce must be g|ven w|th reasonab|e d|||gence

Sec 114 when notice need not be qiven to drower Not|ce of d|shonor |s not requ|red to be
g|ven to the drawer |n e|ther of the fo||ow|ng cases
(a) Where the drawer and drawee are the same person

(b) When the drawee |s f|ct|t|ous person or a person not hav|ng capac|ty to contract

(c) When the drawer |s the person to whom the |nstrument |s presented for payment

(d) Where the drawer has no r|ght to expect or requ|re that the drawee or acceptor w||| honor
the |nstrument

(e) Where the drawer has countermanded payment
Sec 11S when notice need not be qiven to indorser Not|ce of d|shonor |s not requ|red to
be g|ven to an |ndorser |n e|ther of the fo||ow|ng cases
(a) When the drawee |s a f|ct|t|ous person or person not hav|ng capac|ty to contract and the
|ndorser was aware of that fact at the t|me he |ndorsed the |nstrument

(b) Where the |ndorser |s the person to whom the |nstrument |s presented for payment

(c) Where the |nstrument was made or accepted for h|s accommodat|on
Sec 116 Notice of nonpoyment where occeptonce refused Where due not|ce of d|shonor
by nonacceptance has been g|ven not|ce of a subsequent d|shonor by nonpayment |s not
necessary un|ess |n the meant|me the |nstrument has been accepted

Sec 117 ffect of omission to qive notice of nonocceptonce An om|ss|on to g|ve not|ce of
d|shonor by nonacceptance does not pre[ud|ce the r|ghts of a ho|der |n due course
subsequent to the om|ss|on

Sec 118 when protest need not be mode when must be mode Where any negot|ab|e
|nstrument has been d|shonored |t may be protested for nonacceptance or nonpayment as
the case may be but protest |s not requ|red except |n the case of fore|gn b|||s of exchange
rob|es v|rtua| |aw ||brary

VIII DISCnAkGL CI NLGC1IA8LL INS1kUMLN1S

Sec 119 lnstrument how dischorqed A negot|ab|e |nstrument |s d|scharged
(a) 8y payment |n due course by or on beha|f of the pr|nc|pa| debtor

(b) 8y payment |n due course by the party accommodated where the |nstrument |s made or
accepted for h|s accommodat|on

(c) 8y the |ntent|ona| cance||at|on thereof by the ho|der

(d) 8y any other act wh|ch w||| d|scharge a s|mp|e contract for the payment of money

(e) When the pr|nc|pa| debtor becomes the ho|der of the |nstrument at or after matur|ty |n
h|s own r|ght
Sec 120 when persons secondori/y /iob/e on the instrument ore dischorqed A person
secondar||y ||ab|e on the |nstrument |s d|scharged
(a) 8y any act wh|ch d|scharges the |nstrument

(b) 8y the |ntent|ona| cance||at|on of h|s s|gnature by the ho|der

(c) 8y the d|scharge of a pr|or party

(d) 8y a va||d tender or payment made by a pr|or party

(e) 8y a re|ease of the pr|nc|pa| debtor un|ess the ho|ders r|ght of recourse aga|nst the party
secondar||y ||ab|e |s express|y reserved

(f) 8y any agreement b|nd|ng upon the ho|der to extend the t|me of payment or to postpone
the ho|ders r|ght to enforce the |nstrument un|ess made w|th the assent of the party
secondar||y ||ab|e or un|ess the r|ght of recourse aga|nst such party |s express|y reserved
Sec 121 kiqht of porty who dischorqes instrument Where the |nstrument |s pa|d by a party
secondar||y ||ab|e thereon |t |s not d|scharged but the party so pay|ng |t |s rem|tted to h|s
former r|ghts as regard a|| pr|or part|es and he may str|ke out h|s own and a|| subsequent
|ndorsements and aga|nst negot|ate the |nstrument except
(a) Where |t |s payab|e to the order of a th|rd person and has been pa|d by the drawer and

(b) Where |t was made or accepted for accommodat|on and has been pa|d by the party
accommodated
Sec 122 kenunciotion by ho/der 1he ho|der may express|y renounce h|s r|ghts aga|nst any
party to the |nstrument before at or after |ts matur|ty An abso|ute and uncond|t|ona|
renunc|at|on of h|s r|ghts aga|nst the pr|nc|pa| debtor made at or after the matur|ty of the
|nstrument d|scharges the |nstrument 8ut a renunc|at|on does not affect the r|ghts of a
ho|der |n due course w|thout not|ce A renunc|at|on must be |n wr|t|ng un|ess the |nstrument
|s de||vered up to the person pr|mar||y ||ab|e thereon

Sec 123 conce//otion unintentiono/ burden of proof A cance||at|on made un|ntent|ona||y
or under a m|stake or w|thout the author|ty of the ho|der |s |noperat|ve but where an
|nstrument or any s|gnature thereon appears to have been cance||ed the burden of proof ||es
on the party who a||eges that the cance||at|on was made un|ntent|ona||y or under a m|stake
or w|thout author|ty

Sec 124 /terotion of instrument effect of Where a negot|ab|e |nstrument |s mater|a||y
a|tered w|thout the assent of a|| part|es ||ab|e thereon |t |s avo|ded except as aga|nst a party
who has h|mse|f made author|zed or assented to the a|terat|on and subsequent |ndorsers
8ut when an |nstrument has been mater|a||y a|tered and |s |n the hands of a ho|der |n due
course not a party to the a|terat|on he may enforce payment thereof accord|ng to |ts or|g|na|
tenor

Sec 12S whot constitutes o moterio/ o/terotion Any a|terat|on wh|ch changes
(a) 1he date

(b) 1he sum payab|e e|ther for pr|nc|pa| or |nterest

(c) 1he t|me or p|ace of payment

(d) 1he number or the re|at|ons of the part|es

(e) 1he med|um or currency |n wh|ch payment |s to be made

(f) Cr wh|ch adds a p|ace of payment where no p|ace of payment |s spec|f|ed or any other
change or add|t|on wh|ch a|ters the effect of the |nstrument |n any respect |s a mater|a|
a|terat|on
8ILLS CI LkCnANGL

Ik ICkM AND IN1LkkL1A1ICN

Sec 126 8i// of exchonqe defined A b||| of exchange |s an uncond|t|ona| order |n wr|t|ng
addressed by one person to another s|gned by the person g|v|ng |t requ|r|ng the person to
whom |t |s addressed to pay on demand or at a f|xed or determ|nab|e future t|me a sum
certa|n |n money to order or to bearer

Sec 127 8i// not on ossiqnment of funds in honds of drowee A b||| of |tse|f does not operate
as an ass|gnment of the funds |n the hands of the drawee ava||ab|e for the payment thereof
and the drawee |s not ||ab|e on the b||| un|ess and unt|| he accepts the same

Sec 128 8i// oddressed to more thon one drowee A b||| may be addressed to two or more
drawees [o|nt|y whether they are partners or not but not to two or more drawees |n the
a|ternat|ve or |n success|on

Sec 129 ln/ond ond foreiqn bi//s of exchonqe An |n|and b||| of exchange |s a b||| wh|ch |s or
on |ts face purports to be both drawn and payab|e w|th|n the h|||pp|nes Any other b||| |s a
fore|gn b||| Un|ess the contrary appears on the face of the b||| the ho|der may treat |t as an
|n|and b|||

Sec 130 when bi// moy be treoted os promissory note Where |n a b||| the drawer and
drawee are the same person or where the drawee |s a f|ct|t|ous person or a person not hav|ng
capac|ty to contract the ho|der may treat the |nstrument at h|s opt|on e|ther as a b||| of
exchange or as a prom|ssory note

Sec 131 keferee in cose of need 1he drawer of a b||| and any |ndorser may |nsert thereon
the name of a person to whom the ho|der may resort |n case of need that |s to say |n case
the b||| |s d|shonored by nonacceptance or nonpayment Such person |s ca||ed a referee |n
case of need It |s |n the opt|on of the ho|der to resort to the referee |n case of need or not as
he may see f|t

k ACCL1ANCL

Sec 132 cceptonce how mode by ond so forth 1he acceptance of a b||| |s the s|gn|f|cat|on
by the drawee of h|s assent to the order of the drawer 1he acceptance must be |n wr|t|ng
and s|gned by the drawee It must not express that the drawee w||| perform h|s prom|se by
any other means than the payment of money

Sec 133 no/der entit/ed to occeptonce on foce of bi// 1he ho|der of a b||| present|ng the
same for acceptance may requ|re that the acceptance be wr|tten on the b||| and |f such
request |s refused may treat the b||| as d|shonored

Sec 134 cceptonce by seporote instrument Where an acceptance |s wr|tten on a paper
other than the b||| |tse|f |t does not b|nd the acceptor except |n favor of a person to whom |t
|s shown and who on the fa|th thereof rece|ves the b||| for va|ue

Sec 13S 9romise to occept when equivo/ent to occeptonce An uncond|t|ona| prom|se |n
wr|t|ng to accept a b||| before |t |s drawn |s deemed an actua| acceptance |n favor of every
person who upon the fa|th thereof rece|ves the b||| for va|ue

Sec 136 1ime o//owed drowee to occept 1he drawee |s a||owed twentyfour hours after
presentment |n wh|ch to dec|de whether or not he w||| accept the b||| the acceptance |f
g|ven dates as of the day of presentat|on

Sec 137 Liobi/ity of drowee returninq or destroyinq bi// Where a drawee to whom a b||| |s
de||vered for acceptance destroys the same or refuses w|th|n twentyfour hours after such
de||very or w|th|n such other per|od as the ho|der may a||ow to return the b||| accepted or
nonaccepted to the ho|der he w||| be deemed to have accepted the same

Sec 138 cceptonce of incomp/ete bi// A b||| may be accepted before |t has been s|gned by
the drawer or wh||e otherw|se |ncomp|ete or when |t |s overdue or after |t has been
d|shonored by a prev|ous refusa| to accept or by non payment 8ut when a b||| payab|e after
s|ght |s d|shonored by nonacceptance and the drawee subsequent|y accepts |t the ho|der |n
the absence of any d|fferent agreement |s ent|t|ed to have the b||| accepted as of the date of
the f|rst presentment

Sec 139 inds of occeptonce An acceptance |s e|ther genera| or qua||f|ed A genera|
acceptance assents w|thout qua||f|cat|on to the order of the drawer A qua||f|ed acceptance |n
express terms var|es the effect of the b||| as drawn

Sec 140 whot constitutes o qenero/ occeptonce An acceptance to pay at a part|cu|ar p|ace
|s a genera| acceptance un|ess |t express|y states that the b||| |s to be pa|d there on|y and not
e|sewhere

Sec 141 uo/ified occeptonce An acceptance |s qua||f|ed wh|ch |s
(a) Cond|t|ona| that |s to say wh|ch makes payment by the acceptor dependent on the
fu|f|||ment of a cond|t|on there|n stated

(b) art|a| that |s to say an acceptance to pay part on|y of the amount for wh|ch the b||| |s
drawn

(c) Loca| that |s to say an acceptance to pay on|y at a part|cu|ar p|ace

(d) ua||f|ed as to t|me

(e) 1he acceptance of some one or more of the drawees but not of a||
Sec 142 kiqhts of porties os to quo/ified occeptonce 1he ho|der may refuse to take a
qua||f|ed acceptance and |f he does not obta|n an unqua||f|ed acceptance he may treat the
b||| as d|shonored by nonacceptance Where a qua||f|ed acceptance |s taken the drawer and
|ndorsers are d|scharged from ||ab|||ty on the b||| un|ess they have express|y or |mp||ed|y
author|zed the ho|der to take a qua||f|ed acceptance or subsequent|y assent thereto When
the drawer or an |ndorser rece|ves not|ce of a qua||f|ed acceptance he must w|th|n a
reasonab|e t|me express h|s d|ssent to the ho|der or he w||| be deemed to have assented
thereto

kI kLSLN1MLN1 ICk ACCL1ANCL

Sec 143 when presentment for occeptonce must be mode resentment for acceptance
must be made
(a) Where the b||| |s payab|e after s|ght or |n any other case where presentment for
acceptance |s necessary |n order to f|x the matur|ty of the |nstrument or

(b) Where the b||| express|y st|pu|ates that |t sha|| be presented for acceptance or

(c) Where the b||| |s drawn payab|e e|sewhere than at the res|dence or p|ace of bus|ness of
the drawee
In no other case |s presentment for acceptance necessary |n order to render any party to the
b||| ||ab|e

Sec 144 when foi/ure to present re/eoses drower ond indorser Lxcept as here|n otherw|se
prov|ded the ho|der of a b||| wh|ch |s requ|red by the next preced|ng sect|on to be presented
for acceptance must e|ther present |t for acceptance or negot|ate |t w|th|n a reasonab|e t|me
If he fa||s to do so the drawer and a|| |ndorsers are d|scharged

Sec 14S 9resentment how mode resentment for acceptance must be made by or on
beha|f of the ho|der at a reasonab|e hour on a bus|ness day and before the b||| |s overdue to
the drawee or some person author|zed to accept or refuse acceptance on h|s beha|f and
(a) Where a b||| |s addressed to two or more drawees who are not partners presentment
must be made to them a|| un|ess one has author|ty to accept or refuse acceptance for a|| |n
wh|ch case presentment may be made to h|m on|y

(b) Where the drawee |s dead presentment may be made to h|s persona| representat|ve

(c) Where the drawee has been ad[udged a bankrupt or an |nso|vent or has made an
ass|gnment for the benef|t of cred|tors presentment may be made to h|m or to h|s trustee or
ass|gnee
Sec 146 On whot doys presentment moy be mode A b||| may be presented for acceptance
on any day on wh|ch negot|ab|e |nstruments may be presented for payment under the
prov|s|ons of Sect|ons seventytwo and e|ghtyf|ve of th|s Act When Saturday |s not
otherw|se a ho||day presentment for acceptance may be made before twe|ve oc|ock noon
on that day

Sec 147 9resentment where time is insufficient Where the ho|der of a b||| drawn payab|e
e|sewhere than at the p|ace of bus|ness or the res|dence of the drawee has no t|me w|th the
exerc|se of reasonab|e d|||gence to present the b||| for acceptance before present|ng |t for
payment on the day that |t fa||s due the de|ay caused by present|ng the b||| for acceptance
before present|ng |t for payment |s excused and does not d|scharge the drawers and
|ndorsers

Sec 148 where presentment is excused resentment for acceptance |s excused and a b|||
may be treated as d|shonored by nonacceptance |n e|ther of the fo||ow|ng cases
(a) Where the drawee |s dead or has absconded or |s a f|ct|t|ous person or a person not
hav|ng capac|ty to contract by b|||

(b) Where after the exerc|se of reasonab|e d|||gence presentment can not be made

(c) Where a|though presentment has been |rregu|ar acceptance has been refused on some
other ground
Sec 149 when dishonored by nonocceptonce A b||| |s d|shonored by nonacceptance
(a) When |t |s du|y presented for acceptance and such an acceptance as |s prescr|bed by th|s
Act |s refused or can not be obta|ned or

(b) When presentment for acceptance |s excused and the b||| |s not accepted
Sec 1S0 uuty of ho/der where bi// not occepted Where a b||| |s du|y presented for
acceptance and |s not accepted w|th|n the prescr|bed t|me the person present|ng |t must
treat the b||| as d|shonored by nonacceptance or he |oses the r|ght of recourse aga|nst the
drawer and |ndorsers

Sec 1S1 kiqhts of ho/der where bi// not occepted When a b||| |s d|shonored by
nonacceptance an |mmed|ate r|ght of recourse aga|nst the drawer and |ndorsers accrues to
the ho|der and no presentment for payment |s necessary

kII kC1LS1

Sec 1S2 ln whot coses protest necessory Where a fore|gn b||| appear|ng on |ts face to be
such |s d|shonored by nonacceptance |t must be du|y protested for nonacceptance by
nonacceptance |s d|shonored and where such a b||| wh|ch has not prev|ous|y been d|shonored
by nonpayment |t must be du|y protested for nonpayment If |t |s not so protested the
drawer and |ndorsers are d|scharged Where a b||| does not appear on |ts face to be a fore|gn
b||| protest thereof |n case of d|shonor |s unnecessary

Sec 1S3 9rotest how mode 1he protest must be annexed to the b||| or must conta|n a copy
thereof and must be under the hand and sea| of the notary mak|ng |t and must spec|fy
(a) 1he t|me and p|ace of presentment

(b) 1he fact that presentment was made and the manner thereof

(c) 1he cause or reason for protest|ng the b|||

(d) 1he demand made and the answer g|ven |f any or the fact that the drawee or acceptor
cou|d not be found
Sec 1S4 9rotest by whom mode rotest may be made by
(a) A notary pub||c or

(b) 8y any respectab|e res|dent of the p|ace where the b||| |s d|shonored |n the presence of
two or more cred|b|e w|tnesses
Sec 1SS 9rotest when to be mode When a b||| |s protested such protest must be made on
the day of |ts d|shonor un|ess de|ay |s excused as here|n prov|ded When a b||| has been du|y
noted the protest may be subsequent|y extended as of the date of the not|ng

Sec 1S6 9rotest where mode A b||| must be protested at the p|ace where |t |s d|shonored
except that when a b||| drawn payab|e at the p|ace of bus|ness or res|dence of some person
other than the drawee has been d|shonored by nonacceptance |t must be protested for non
payment at the p|ace where |t |s expressed to be payab|e and no further presentment for
payment to or demand on the drawee |s necessary

Sec 1S7 9rotest both for nonocceptonce ond nonpoyment A b||| wh|ch has been protested
for nonacceptance may be subsequent|y protested for nonpayment

Sec 1S8 9rotest before moturity where occeptor inso/vent Where the acceptor has been
ad[udged a bankrupt or an |nso|vent or has made an ass|gnment for the benef|t of cred|tors
before the b||| matures the ho|der may cause the b||| to be protested for better secur|ty
aga|nst the drawer and |ndorsers rob|es v|rtua| |aw ||brary

Sec 1S9 when protest dispensed with rotest |s d|spensed w|th by any c|rcumstances
wh|ch wou|d d|spense w|th not|ce of d|shonor De|ay |n not|ng or protest|ng |s excused when
de|ay |s caused by c|rcumstances beyond the contro| of the ho|der and not |mputab|e to h|s
defau|t m|sconduct or neg||gence When the cause of de|ay ceases to operate the b||| must
be noted or protested w|th reasonab|e d|||gence

Sec 160 9rotest where bi// is /ost ond so forth When a b||| |s |ost or destroyed or |s wrong|y
deta|ned from the person ent|t|ed to ho|d |t protest may be made on a copy or wr|tten
part|cu|ars thereof

kIII ACCL1ANCL ICk nCNCk

Sec 161 when bi// moy be occepted for honor When a b||| of exchange has been protested
for d|shonor by nonacceptance or protested for better secur|ty and |s not overdue any
person not be|ng a party a|ready ||ab|e thereon may w|th the consent of the ho|der
|ntervene and accept the b||| supro protest for the honor of any party ||ab|e thereon or for the
honor of the person for whose account the b||| |s drawn 1he acceptance for honor may be for
part on|y of the sum for wh|ch the b||| |s drawn and where there has been an acceptance for
honor for one party there may be a further acceptance by a d|fferent person for the honor of
another party

Sec 162 cceptonce for honor how mode An acceptance for honor supra protest must be
|n wr|t|ng and |nd|cate that |t |s an acceptance for honor and must be s|gned by the acceptor
for honor chanrob|es |aw

Sec 163 when deemed to be on occeptonce for honor of the drower Where an acceptance
for honor does not express|y state for whose honor |t |s made |t |s deemed to be an
acceptance for the honor of the drawer

Sec 164 Liobi/ity of the occeptor for honor 1he acceptor for honor |s ||ab|e to the ho|der
and to a|| part|es to the b||| subsequent to the party for whose honor he has accepted

Sec 16S qreement of occeptor for honor 1he acceptor for honor by such acceptance
engages that he w||| on due presentment pay the b||| accord|ng to the terms of h|s
acceptance prov|ded |t sha|| not have been pa|d by the drawee and prov|ded a|so that |s sha||
have been du|y presented for payment and protested for nonpayment and not|ce of
d|shonor g|ven to h|m

Sec 166 Moturity of bi// poyob/e ofter siqht occepted for honor Where a b||| payab|e after
s|ght |s accepted for honor |ts matur|ty |s ca|cu|ated from the date of the not|ng for non
acceptance and not from the date of the acceptance for honor

Sec 167 9rotest of bi// occepted for honor ond so forth Where a d|shonored b||| has been
accepted for honor supra protest or conta|ns a referee |n case of need |t must be protested
for nonpayment before |t |s presented for payment to the acceptor for honor or referee |n
case of need

Sec 168 9resentment for poyment to occeptor for honor how mode resentment for
payment to the acceptor for honor must be made as fo||ows
(a) If |t |s to be presented |n the p|ace where the protest for nonpayment was made |t must
be presented not |ater than the day fo||ow|ng |ts matur|ty

(b) If |t |s to be presented |n some other p|ace than the p|ace where |t was protested then |t
must be forwarded w|th|n the t|me spec|f|ed |n Sect|on one hundred and four
Sec 169 when de/oy in mokinq presentment is excused 1he prov|s|ons of Sect|on e|ghty
one app|y where there |s de|ay |n mak|ng presentment to the acceptor for honor or referee |n
case of need

Sec 170 uishonor of bi// by occeptor for honor When the b||| |s d|shonored by the acceptor
for honor |t must be protested for nonpayment by h|m

kIV AMLN1 ICk nCNCk

Sec 171 who moy moke poyment for honor Where a b||| has been protested for non
payment any person may |ntervene and pay |t supro protest for the honor of any person
||ab|e thereon or for the honor of the person for whose account |t was drawn

Sec 172 9oyment for honor how mode 1he payment for honor supro protest |n order to
operate as such and not as a mere vo|untary payment must be attested by a notar|a| act of
honor wh|ch may be appended to the protest or form an extens|on to |t

Sec 173 uec/orotion before poyment for honor 1he notar|a| act of honor must be founded
on a dec|arat|on made by the payer for honor or by h|s agent |n that beha|f dec|ar|ng h|s
|ntent|on to pay the b||| for honor and for whose honor he pays

Sec 174 9reference of porties offerinq to poy for honor Where two or more persons offer
to pay a b||| for the honor of d|fferent part|es the person whose payment w||| d|scharge most
part|es to the b||| |s to be g|ven the preference

Sec 17S ffect on subsequent porties where bi// is poid for honor Where a b||| has been
pa|d for honor a|| part|es subsequent to the party for whose honor |t |s pa|d are d|scharged
but the payer for honor |s subrogated for and succeeds to both the r|ghts and dut|es of the
ho|der as regards the party for whose honor he pays and a|| part|es ||ab|e to the |atter

Sec 176 where ho/der refuses to receive poyment supro protest Where the ho|der of a b|||
refuses to rece|ve payment supro protest he |oses h|s r|ght of recourse aga|nst any party who
wou|d have been d|scharged by such payment

Sec 177 kiqhts of poyer for honor 1he payer for honor on pay|ng to the ho|der the amount
of the b||| and the notar|a| expenses |nc|denta| to |ts d|shonor |s ent|t|ed to rece|ve both the
b||| |tse|f and the protest

kV 8ILLS IN SL1

Sec 178 8i//s in set constitute one bi// Where a b||| |s drawn |n a set each part of the set
be|ng numbered and conta|n|ng a reference to the other parts the who|e of the parts
const|tutes one b|||

Sec 179 kiqht of ho/ders where different ports ore neqotioted Where two or more parts of
a set are negot|ated to d|fferent ho|ders |n due course the ho|der whose t|t|e f|rst accrues |s
as between such ho|ders the true owner of the b||| 8ut noth|ng |n th|s sect|on affects the
r|ght of a person who |n due course accepts or pays the parts f|rst presented to h|m

Sec 180 Liobi/ity of ho/der who indorses two or more ports of o set to different persons
Where the ho|der of a set |ndorses two or more parts to d|fferent persons he |s ||ab|e on
every such part and every |ndorser subsequent to h|m |s ||ab|e on the part he has h|mse|f
|ndorsed as |f such parts were separate b|||s

Sec 181 cceptonce of bi// drown in sets 1he acceptance may be wr|tten on any part and |t
must be wr|tten on one part on|y If the drawee accepts more than one part and such
accepted parts negot|ated to d|fferent ho|ders |n due course he |s ||ab|e on every such part as
|f |t were a separate b|||

Sec 182 9oyment by occeptor of bi//s drown in sets When the acceptor of a b||| drawn |n a
set pays |t w|thout requ|r|ng the part bear|ng h|s acceptance to be de||vered up to h|m and
the part at matur|ty |s outstand|ng |n the hands of a ho|der |n due course he |s ||ab|e to the
ho|der thereon

Sec 183 ffect of dischorqinq one of o set Lxcept as here|n otherw|se prov|ded where any
one part of a b||| drawn |n a set |s d|scharged by payment or otherw|se the who|e b||| |s
d|scharged

kVI kCMISSCk NC1LS AND CnLCkS

Sec 184 9romissory note defined A negot|ab|e prom|ssory note w|th|n the mean|ng of th|s
Act |s an uncond|t|ona| prom|se |n wr|t|ng made by one person to another s|gned by the
maker engag|ng to pay on demand or at a f|xed or determ|nab|e future t|me a sum certa|n
|n money to order or to bearer Where a note |s drawn to the makers own order |t |s not
comp|ete unt|| |ndorsed by h|m

Sec 18S check defined A check |s a b||| of exchange drawn on a bank payab|e on demand
Lxcept as here|n otherw|se prov|ded the prov|s|ons of th|s Act app||cab|e to a b||| of exchange
payab|e on demand app|y to a check

Sec 186 within whot time o check must be presented A check must be presented for
payment w|th|n a reasonab|e t|me after |ts |ssue or the drawer w||| be d|scharged from
||ab|||ty thereon to the extent of the |oss caused by the de|ay

Sec 187 certificotion of check effect of Where a check |s cert|f|ed by the bank on wh|ch |t
|s drawn the cert|f|cat|on |s equ|va|ent to an acceptance

Sec 188 ffect where the ho/der of check procures it to be certified Where the ho|der of a
check procures |t to be accepted or cert|f|ed the drawer and a|| |ndorsers are d|scharged from
||ab|||ty thereon

Sec 189 when check operotes os on ossiqnment A check of |tse|f does not operate as an
ass|gnment of any part of the funds to the cred|t of the drawer w|th the bank and the bank |s
not ||ab|e to the ho|der un|ess and unt|| |t accepts or cert|f|es the check

kVII GLNLkAL kCVISICNS

Sec 190 5hort tit/e 1h|s Act sha|| be known as the Negot|ab|e Instruments Law

Sec 191 uefinition ond meoninq of terms In th|s Act un|ess the contract otherw|se
requ|res
cceptonce means an acceptance comp|eted by de||very or not|f|cat|on

ction |nc|udes counterc|a|m and setoff

8onk |nc|udes any person or assoc|at|on of persons carry|ng on the bus|ness of bank|ng
whether |ncorporated or not

8eorer means the person |n possess|on of a b||| or note wh|ch |s payab|e to bearer

8i// means b||| of exchange and note means negot|ab|e prom|ssory note

ue/ivery means transfer of possess|on actua| or construct|ve from one person to another

no/der means the payee or |ndorsee of a b||| or note who |s |n possess|on of |t or the
bearer thereof

lndorsement means an |ndorsement comp|eted by de||very

lnstrument means negot|ab|e |nstrument

lssue means the f|rst de||very of the |nstrument comp|ete |n form to a person who takes |t
as a ho|der

9erson |nc|udes a body of persons whether |ncorporated or not

vo/ue means va|uab|e cons|derat|on

written |nc|udes pr|nted and writinq |nc|udes pr|nt
Sec 192 9ersons primori/y /iob/e on instrument 1he person primori/y ||ab|e on an
|nstrument |s the person who by the terms of the |nstrument |s abso|ute|y requ|red to pay
the same A|| other part|es are secondori/y ||ab|e

Sec 193 keosonob/e time whot constitutes In determ|n|ng what |s a reosonob/e time
regard |s to be had to the nature of the |nstrument the usage of trade or bus|ness w|th
respect to such |nstruments and the facts of the part|cu|ar case

Sec 194 1ime how computed when /ost doy fo//s on ho/idoy Where the day or the |ast
day for do|ng any act here|n requ|red or perm|tted to be done fa||s on a Sunday or on a
ho||day the act may be done on the next succeed|ng secu|ar or bus|ness day

Sec 19S pp/icotion of ct 1he prov|s|ons of th|s Act do not app|y to negot|ab|e
|nstruments made and de||vered pr|or to the tak|ng effect hereof chanrob|es |aw

Sec 196 coses not provided for in ct Any case not prov|ded for |n th|s Act sha|| be
governed by the prov|s|ons of ex|st|ng |eg|s|at|on or |n defau|t thereof by the ru|es of the |aw
merchant

Sec 197 kepeo/s A|| acts and |aws and parts thereof |ncons|stent w|th th|s Act are hereby
repea|ed

Sec 198 1ime when ct tokes effect 1h|s Act sha|| take effect n|nety days after |ts
pub||cat|on |n the Cff|c|a| Gazette of the h|||pp|ne Is|ands sha|| have been comp|eted