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    What Is Discharging of Negotiable Instrument

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    swatantra
    There are several modes by which the liability on a negotiable instrument can be discharged. These include cancellation, release, payment in due course, allowing the drawee too much time, material alteration of the instrument, failure to give notice of dishonor, and operation of law such as insolvency, expiration of the statute of limitations, or merger of the instrument into a judgment debt. The key modes are cancellation, release, payment in due course, material alteration, and failure to give notice of dishonor.

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    What Is Discharging of Negotiable Instrument

    Uploaded by

    swatantra
    230 views2 pages
    There are several modes by which the liability on a negotiable instrument can be discharged. These include cancellation, release, payment in due course, allowing the drawee too much time, material alteration of the instrument, failure to give notice of dishonor, and operation of law such as insolvency, expiration of the statute of limitations, or merger of the instrument into a judgment debt. The key modes are cancellation, release, payment in due course, material alteration, and failure to give notice of dishonor.

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    What is Discharging of Negotiable Instrument

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    There are several modes by which the liability on a negotiable instrument can be discharged. These include cancellation, release, payment in due course, allowing the drawee too much time, material alteration of the instrument, failure to give notice of dishonor, and operation of law such as insolvency, expiration of the statute of limitations, or merger of the instrument into a judgment debt. The key modes are cancellation, release, payment in due course, material alteration, and failure to give notice of dishonor.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    230 views2 pages

    What Is Discharging of Negotiable Instrument

    Uploaded by

    swatantra
    There are several modes by which the liability on a negotiable instrument can be discharged. These include cancellation, release, payment in due course, allowing the drawee too much time, material alteration of the instrument, failure to give notice of dishonor, and operation of law such as insolvency, expiration of the statute of limitations, or merger of the instrument into a judgment debt. The key modes are cancellation, release, payment in due course, material alteration, and failure to give notice of dishonor.

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    What is Discharging of Negotiable Instrument?

    Discharging of a negotiable instrument means that all the rights


    of action under it are completely extinguished and it ceases to be
    negotiated anymore.

    Modes of Discharge of Liability in Negotiable Instrument


    Under following modes the maker, acceptor and endorser of a
    negotiable instrument is discharged from liability;
    1. By Cancellation
    Under this scheme, a holder who cancels acceptor's or
    endorser's name apparently or with intention to discharge
    him from the negotiable instrument, the latter is said to have
    discharged.
    2. By release
    A holder thereof who, by means other than cancellation,
    discharges maker, acceptor or endorser, and to all parties
    deriving title under such holder after notice of such
    discharge.
    3. By Payment in the Due Course
    When the payment on an instrument, at its maturity, is made
    by the party liable then all the parties stand discharged from
    the liability of negotiable instrument.
    4. By Allowing Drawee
    In this case, if a person holding the negotiable instrument
    allows the drawee for over 48 hours to consider whether he
    will accept the same then all the previous who didn't consent
    to the said allowance stand discharged.
    5. Material Alteration
    In case a material alteration brought in the instrument, all
    the parties who do not consent to the said alternation stand
    discharged from the liability.
    6. Notice of Dishonor
    In case the holder of negotiable instrument fails to issue
    notice of dishonor to all the previous parties, they stand
    discharged.
    7. By Operation of Law
    Liability against the negotiable instrument also stand
    discharged in case of legal operations like;
    Insolvency of debtor
    Loss of remedy on expiry of the limitation
    Merger of note into judgment debt
    Merger of lesser security into higher security

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