Presentation:

Chapter No: 20
Parties to Negotiable Instrument
Group Member:
Ikram Hameedullah
Balach
Bohair
Asghar
Bazid
Fazul
 Contents

Parties to negotiable instrument

Holder in due course
Drawee in case of need
Acceptance for honor
Capacity of parties
Liability of parties
Discharge from liability
 Negotiable Instrument
 A negotiable instrument is a document guaranteeing the payment of
a specific amount of money, either on demand, or at a set time, with
the payer named on the document.
 Example: promissory Notes, Bills of exchange, cheque etc.
 Holder
 The person who has the legal right to enforce a Negotiable
Instrument(promissory Notes, Cheque etc.)
 When the Note, Bill or Cheque is lost or destroyed ,it is deemed to
be continue of its holder.
 HOLDER IN DUE COURSE
 An individual who takes a Commercial Paper for value, in Good Faith,
with the belief that it is valid, with no knowledge of any defects.

 Holder in due course is a person who takes possession of the

negotiable instruments in good faith and for consideration.
 HOLDER VS HOLDER IN DUE COURSE
Consideration
Maturity
Good faith
Title
Enforcement of rights
Privileges
 JOINT HOLDER
When there are several payees or endorsees in a bill, all of them are
joint holders and none of them can alone negotiate or sue on it. All of
them must join to negotiate or sue on it. If one of them is dead, all the
legal representatives of the deceased must join with the surviving
payee to negotiate the instrument or sue on it
 Drawee in case of Need
Sometime the name of another person is mentioned in the bill who
will accept the bill if the original drawee does not accept it .such an
additional drawee is called a draweee in case of need.
 ACCEPTANCE OF HONOR
Sometimes the original drawee refuses to accept the bill or refuses to
provide better security when demanded by the notary. In such a case,
any person may voluntarily accept the bill in order to safeguard the
honor of the drawer. Such person is known as the acceptor for honor.
[Sec 108-109]
 CAPACITY OF PARTIES
The position of different persons is as follow. [Sec. 26-29]
1) Minor
2) Insolvent
3) Person of unsound mind
4) Joint stock company
5) Partner
6) Agent
 LIABILITIES OF PARTIES
The following is the nature of liabilities of various parties:
1. Drawer.
2. Drawee of cheque.
3. Maker of note and acceptor of bill.
4. Endorser.
5. Prior parties to holder in Due course.
6. Maker, Drawer and Acceptor as principles.
7. Prior party to subsequent party.
8. Accommodation party.
9. Surety ship.
 Discharge From Liability

1) Cancellation
2) Release
3) Payment
4) Allowing Drawee
5) Delay in presentment
6) Cheque payable to order
7) Draw by Bank
 Discharge From Liability

8) Qualified acceptance
9) Operation of law
10) Material alteration
11) Payment of altered instrument
12) Notice of dishonor
13) Non-presentment for acceptance
Thank you