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Dishonour of Bill of Exchange

notice, dishonoured, holder, acceptance, indorsers and drawer

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DISHONOUR OF BILL OF EXCHANGE. A bill is dishonoured either by non-accept ance or by non-payment. That is, where the person on whom a bill is drawn (the drawee) refuses to accept it, or where the person who by accepting the bill (the acceptor) agreed to pay it, fails to do so on the day on which it is due, the bill is said to be dishonourA.

As to dishonour by non-acceptance, the Bills of Exchange Act, 1882, provides as follows : " Section 42. When a bill is duly pre sented for acceptance and is not accepted within the customary time, the person presenting it must treat it as dishonoured by non-acceptance. If he do not, the holder shall lose his right of recourse against the drawer and indorsers.

" Section 43. A bill is dishonoured by non-acceptance " (a) When it is duly presented for accept ance, and such an acceptance as is prescribed by this Act is refused or cannot be obtained : or • (b) When presentment for acceptance is exy used and the bill is not accepted.

(2) Subject to the provisions of this Act. when a bill is dishonoured by non acceptance, an immediate right of recourse against the drawer and indorsers accrues to the holder, and no presentment for payment is necessary." Section Is. A bill may be accepted ' (2) When it is overdue, or after it has been dishonoured by a previous refusal to accept, or by non payment : "• (3) When a bill payable after sight is dishonoured by non-acceptance, and the drawee subsequently ac cepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of first presentment to the drawee for acceptance." As to dishonour by non-payment, Section 47 provides : " (1) A bill is dishonoured by non-pay ment (a) when it is duly presented for payment and payment is re fused or cannot be obtained, or (b) when presentment is excused and the bill is overdue and unpaid.

" (2) Subject to the provisions of this Act, when a bill is dishonoured by non payment, an immediate right of recourse against the drawer and indorsers accrues to the holder." Notice of dishonour must be given.

Section 48 provides as follows : " Subject to the provisions of this Act, when a bill has been dishonoured by non acceptance or by non-payment, notice of dishonour must be given to the drawer and each indorser, and any drawer or indorser to whom such notice is not given is dis charged ; Provided that " (1) Where a bill is dishonoured by non acceptance, and notice of dishonour is not given, the rights of a holder in due course subsequent to the omission, shall not be prejudiced by the omission.

" (2) Where a bill is dishonoured by non • acceptance and due notice of dishonour is given, it shall not be necessary to give notice of a subsequent dishonour by non-pay ment unless the bill shall in the meantime have been accepted." Notice to the various parties of the dis honour of a bill must he given in strict conformity with the regulations set forth in Section 49, otherwise the drawer and indorsers may he discharged. The Suction is as follows :— " Notice of dishonour in order to be valid and effectual must be given in accordance with the following rules : " (1) The notice must be given by or on behalf of the holder, or by or on behalf of an indorser who, at the time of giving it, is himself liable on the bill.

" (2) Notice of dishonour may be given by an agent either in his own name, or in the name of any party entitled to give notice whether that party be his principal or not.

" (3) Where the notice is given by or on behalf of the holder, it enures for the benefit of all subsequent holders and all prior indorsers who have a right of recourse against the party to whom it is given.

" (4) Where notice is given by or on behalf of an indorser entitled to give notice as hereinbefore provided, it enures for the benefit of the holder and all indorsers subsequent to the party to whom notice is given.

" (5) The notice may be given in writing or by personal communication, and may be given in any terms which sufficiently identify the bill, and intimate that the bill has been dishonoured by non-acceptance or non-payment.

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