Negotiable Instruments Law
that it may be passed on from one person
(NOTES BASED ON DISCUSSION AND
BOOK)
I. Introduction to Negotiable
Instruments Law
Negotiable Instruments
- Public instruments
- Notarized (however not indicated by law)
Nature of Negotiable Instruments
A. Money
- It can be considered as substitute for
money, but it cannot be considered as legal
tender.
- Money is valuable, but negotiable
instruments should be freely accepted like
money without question in commercial
transactions.
B. Proof of Ownership of Money or Property
- It is considered as a substitute for money
then this would mean as proof that you
have money because a negotiable
instrument is a substitute for money.
C. Commercial Instruments
- Negotiable papers like checks, constitute
the media of exchange for most
commercial transactions.
D. Commercial Contract
- Negotiable instruments can be used in
commercial obligations.
Features of Negotiable Instruments
a. Negotiability (Sec. 47)
- An instrument negotiable in its origin
continues to be negotiable until it has been
restrictively indorsed or discharged by
payment or otherwise (sec. 47, NIL)
- It is the quality or attribute of a bill or note
to another similar to money.
- It gives the holder in due course the right
to hold the instrument and collect the sum
payable for himself free from infirmity.
b. Accumulation of Secondary Contracts
- It is an important feature because as
negotiable instruments are transferred
from one person to another additional
parties can become involved.
Negotiability v. Validity of Instruments
- A valid instrument is not necessarily
negotiable and a negotiable instrument
may be voidable, unenforceable, or void.
- Negotiable instruments are presumed to
be contracts but not all contracts are
negotiable instruments.
- It is the form of the instrument that
determines if it is negotiable or not.
Kinds of Negotiable Instruments
a. Promissory Notes
- It is an unconditional promise in writing
made by one person to another, signed by
the maker, engaging to pay on demand, or
a fixed or determinable future time, a sum
certain in money to order or to bearer.
Where a note is drawn to the maker’s own
order, it is not complete until indorsed by
him (sec. 184, NIL)
b. Bill of Exchange
- It 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 bearer.
 - The negotiation of the original payee
constitutes a secondary contract.

Process of Negotiation

Drawing/Making Issuance Delivery

Acceptance Presentment Payee

Indorsee Negotiation
Payment

Delivery
Indorser
‘
Indorsement
Discharge with delivery

A. Drawing or Making
- Drawee and maker of the instrument
creates it.
B. Issuance
- First negotiation of the instrument
C. Delivery
- Deliver to payee
- Operative act that transfers ownership
over the instrument
D. Payee
- Has the choice of either presenting the
instrument to the Drawee (for the case of
a bill of exchange) or Maker (for the case of
a promissory note) for acceptance,
payment or discharging of the instrument
or to negotiate the instrument either by
delivery or indorsement with delivery.
- Indorsement with delivery would mean
that whoever holds the instrument is
entitled to payment
- Indorsee is new payee who may present
the instrument to the drawer or maker for
acceptance and payment.
E. Discharge
- Once the drawer or maker accepts the
instruments and enacts payment the
instrument is discharged and it loses its
validity.
Parties to a Negotiable Instrument
A. According to the Instrument
a. Promissory Note
  Promisor – one who makes the
instrument and one who promises
to pay
 Promisee – one to whose favor the
promise is made
b. Bill of Exchange
 Drawer – primary debtor
 Drawee – person ordered to pay
the payee
 Payee – person to receive payment
B. According to Liability
a. Primary Liability
 one who has the original obligation
to pay
 In a promissory note the promisor
is both the primary debtor and
primarily liable.’
 In a bill of exchange no one is
primarily liable.
 The drawee may either accept or
reject the instrument, if the
drawee rejects then the drawer
becomes liable he is considered
secondarily liable.
**If the drawee accepts the instrument he now
becomes the acceptor only then can he become
primarily liable. If rejected or dishonoured he
becomes still as a drawee but not anymore liable.
b. Secondary Liability
 If the drawee rejects the
instrument the payee may demand
payment from the drawer because
he is secondarily liable.
**If the drawee accepts the instrument he now
becomes the acceptor only then can he become
primarily liable.
Holder in Due Course
Section 52. What constitutes a holder in due
course – A holder in due course is a holder who has
taken the instrument under the following
conditions:
a. That it is complete and regular upon its
face;
 Complete when all the material
particulars are present.
 The taking of an incomplete
instrument raises the question why
is it incomplete.
 If omission is not important it will
not deprive holder to be holder in
due course.
 Alteration, tampering, or erasure
must be visible or apparent for it to
give a sufficient warning to the
holder that he is not a holder in due
course.
b. That he become the holder of it before it
was overdue, and without notice that it
had been previously dishonoured, if such
was the fact;
 An instrument is overdue after its
maturity.
 Date of maturity is fixed therein,
but if on demand then maturity is
upon presentment.
c. That he took it in good faith and for value;
d. That at the time it was negotiated to him
he had no notice of any infirmity in the
instrument or defect in the title of the
person negotiating it.
**A holder is not a holder in due course if he does
not have at least one of the conditions
enumerated in Sec. 52
**A holder is not a holder in due course if an
instrument is payable on demand and is
negotiated an unreasonable length of time after
its issue (Sec. 53).

Rights of a Holder in Due Course
- He may sue on the instrument in his own
name.
- He may receive payment and if the
payment is in due course, the instrument is
discharged.
- He holds the instrument free from any
defect of title of prior parties
- He holds the instrument free from
defenses available to prior parties among
themselves
- He may enforce payment of the instrument
for the full amount thereof against all
parties liable.
Rights of a Holder not in Due Course
- He holds the instrument subject to defects
of the title and defenses of prior parties
- He can only enforce payment depending
on what amount his transferor was entitled
to.
II. Negotiable Instruments Proper
Section 1. Form of negotiable instruments. – An
instrument to be negotiable must conform to the
following requirements.
a. It must be in writing and signed by the
maker or drawer;
 The document must exist
 Electronic instruments cannot be
negotiable
 Signed by the maker or drawer
 A handwritten statement on the body
of the instrument will be considered as
the maker or drawer’s signature. The
signature is a prima facie evidence of
the intention to be bound as drawer or
maker.
 The instrument need not follow the
language of the law, but any terms are
sufficient which clearly indicate an
intention to conform to the
requirements (Sec. 10, NIL).
o As long as intention of the
parties to make instrument as
negotiable are clear it has force
and effect
o An instrument may be
negotiable though written in
foreign language
o Mere defect does not destroy
negotiability
b. Must contain an unconditional promise or
order to pay a sum certain in money;
 Negotiable instruments are an
absolute undertaking to pay rather
than mere acknowledgment of an
obligation
 Implied promise to pay gives the
instrument effect
 The promise to pay must be
unconditional and not subject to any
condition or contingency to allow
negotiation and to allow circulation of
instrument freely.
 Indication of a particular fund out of
which reimbursement is to be made
(Sec. 3, NIL)
o It is valid because it only
mentions the fund where the
reimbursement comes from
and not the payment itself.
 Indication of a particular fund out of
which payment is to be made (Sec. 3,
NIL)
o Conditional because the
payment is subject to the
availability of the funds where
the payment is to come from.
 Acts addition to payment of money is
generally makes instrument non-
negotiable except;
 o Authorizes sale of
COLLATERAL SECURITIES in
case instrument be not paid at
maturity; or
o Authorizes a confession of
judgment if the instrument be
not paid at maturity; or
o Waives the benefit of any law
intended for the advantage of
protection of obligor; or
o Gives the holder an election to
require something to be done
in lieu of payment of money.
o Any illegal provision or
stipulation is still illegal (Sec. 5,
NIL)
 To assure clarity and certainty in
determining the value the sum certain
in money must be fixed; with interest at
a fixed rate; sum paid by instalments
should include the due date of each.
c. Must be payable on demand, or at a fixed
or determinable future time;
 Must be paid at a determinable future
time;
o At a fixed period after date or
sight; or
o On or before a fixed or
determinable future time
specified; or
o On or at a fixed period after
the occurrence of a SPECIFIED
EVENT CERTAIN TO HAPPEN,
though the time of happening
is uncertain;
o Payment on contingency is
non-negotiable, happening of
event does not cure the defect
(Sec. 4, NIL)
d. Must be payable to order or bearer;
 Must contain the words of negotiability
a e. Where the instrument is addressed to a
drawee, he must be named or otherwise
indicated therein with reasonable
certainty.
Completeness of the Instrument
Material Particulars of an Instrument
- An instrument is complete if all MATERIAL
PARTICULARS are present.
- RULES
o An instrument must contain all
material particulars to be
complete
o An instrument MUST NOT be
issued or negotiated if incomplete
o If the instrument is issued or
negotiated while incomplete:
 The TRANSFEROR MUST
REQUIRE THE
TRANSFEREE TO
COMPLETE IT;
 The TRANSFEREE MUST
COMPLETE THE
INTRUMENT
 Strictly in
accordance with
the instructions
AND
 Within reasonable
time
o If the Transferor does not require
completion, the instrument is
INVALID
o If the Transferee disobeys the
instructions of the Transferor:
 The instrument cannot be
used against any party
before completion
 The instrument is not a
valid instrument in the
hands of the transferee
BUT
 If the instrument is later
negotiated to HOLDER IN
DUE COURSE then he can
demand from the parties
 primarily and secondarily
liable the full amount in
the instrument.
When is the Instrument Incomplete?
a. Issued undated
- If the instrument expressed to be payable
at a fixed period after date is issued
undated, or when acceptance of an
instrument payable at a fixed period after
sight is undated, ANY HOLDER MAY
INSERT THEREIN THE TRUE DATE OF ISSUE
OR ACCEPTANCE, and the instrument shall
be payable accordingly. The insertion of
the wrong date does not void the
instrument in the hands of a subsequent
holder in due course, but as to him, the
date so inserted is to be regarded as true
date (Sec. 13, NIL)
- If the instrument or an acceptance or any
indorsement is dated then the date is prima
facie the true date of the making, drawing,
acceptance, or indorsement (Sec. 11, NIL)
b. Issued ante-dated or post-dated
- Ante-dated – it contains a date earlier than
the true date of issuance.
- Post-dated – it contains a date later than
the true date of issuance.
- An instrument is not invalid if the date was
ante or post-dated as long as it is not for
any fraudulent purpose (Sec. 12, NIL)
c. Issued with blanks
- Two steps in the issuance of a negotiable
instrument:
o Mechanical act of writing the
instrument completely
o Delivery of instrument
- Those with obvious blanks upon issuance
should be filled up
- Complete on its face but written matter
does not fully occupy the paper as to
preclude addition of words. (Sec. 14, NIL)
- Blank check with authority is valid
- Blank check without authority invalid
- RULES if instrument is INCOMPLETE
o Authority to fill up blanks, whoever
is the holder is presumed to have
authority to fill up blanks
o Authority to put any amount, a
signature on a blank paper
delivered in order for it to be
converted into a negotiable
instrument is prima facie authority
to fill it up.
o Instrument may only be enforced
against a party prior to completion
if filled up according to authority
given within a reasonable time.
d. Incomplete instrument delivered
- If undelivered it will not, if completed and
negotiated, without authority be a valid
contract in the hands of any holder as
against any person whose signature was
place before delivery (Sec. 15, NIL)
- Completed without authority because
there was no delivery at all
e. Incomplete instrument which is
undelivered
- All negotiable instruments are revocable
until delivery of the instrument for the
purpose of giving effect. For it to be
effectual it must be made either by or
under authority of the party making,
drawing, accepting, or indorsing and that
delivery must be shown to have been
conditional or for a special purpose.
- If the instrument is in the hands of a holder
in due course then a valid delivery is
presumed to all parties prior to him.
- If the instrument is no longer in the
possession of a party whose signature is
on the instrument then a valid and
intentional delivery is presumed until
contrary is proved (Sec. 16, NIL).
- Delivery is transfer of possession, actual or
constructive.
- Issue is the first delivery of the instrument.
**Completed and negotiated without authority –
not a valid instrument in the hands of a holder as
against any person who signed the instrument
before delivery.
Material Alteration v. Immaterial Alteration
a. Material Alteration
- Any change in the instrument which affects
or changes the liability of parties in any
way.
- If by a party – discharge instrument
- If by a party but with authority and consent
– do not discharge
- Alteration is apparent – burden is on the
holder to explain the alteration that he had
no part therein.
- Alteration by a stranger – it is called
spoliation and has no effect.
- A material alteration avoids the instrument
in the hands of a holder NOT in due course.
(Sec. 124)
- Alteration is material if a change occurs in
the following:
o The date;
o Sum payable, either for principal or
interest;
o Time or place of payment;
o Number or the relations of the
parties;
o Medium or currency in which
payment is to be made;
o Or which adds a place of payment
where no place of payment was
specified or any change or addition
that alters the effect of the
instrument (Sec. 125, NIL)
Payability of Instruments
When is it payable?
a. Payable on Demand
- When expressed to be payable on demand
or at sight, or on presentation, or in which
no time for payment is expressed. If it is
issued, accepted, or indorsed, when
overdue, it is, as regard the person issuing,
or accepting, or indorsing it, payable on
demand. (Sec. 7, NIL).
- Note stating that it is payable on maker’s
convenience is payable on demand.
b. Payable on Maturity
- If a specific date has be expressed.
To Whom Payable?
a. Payable to Order
- It is payable to order where it is drawn
payable to order of a specified person or to
him or his order. It may be drawn or
payable to the order of –
o A payee who is not maker, drawer,
or drawee; or
o Drawer or maker;
o Drawee;
o Two or more payees jointly;
o One or more several payees;
o The holder of an office for the time
being.
o If the instrument is payable to
order the payee must be named or
otherwise indicated with
reasonable certainty (Sec. 8, NIL)
b. Payable to Bearer
- Payable to bearer –
o Expressed to be so payable;
o Payable to person name therein or
bearer
o Payable to the order of a fictitious
name or non-existing person, and
such fact was known to the person
making it so payable;
o The name of the payee does not
purport to be the name of any
person;
o Only or last indorsement is an
indorsement in blank.
**Payable to order can be converted to payable to
bearer, but if it is originally payable to bearer then
it will always be payable to bearer even if
indorsed.

Rules of Construction of Instruments When
Ambiguous
- If sum payable is expressed in words and
figures and there is a discrepancy in the
figures then the words would prevail.
- If the instrument provides for interest
without the date specified then interests’
runs from the date the instrument and if
undated then the day the instrument was
issued.
- If instrument is undated then it is presumed
as dated from the time it was issued.
- If there is conflict between written and
printed provisions, written shall prevail
because of intent of the maker or drawer.
- If instrument is ambiguous and doubt
exists if it is a bill or a note then the holder
may treat it as he chooses.
- If a signature is placed in the instrument
and there is no designation on the capacity
of the signor then he is an indorser.
- If the instrument states that “I promise to
pay” and signed by two or more person
then they are jointly and severally liable.
Rules on Signatures
As a rule, only persons whose signatures appear
on the instrument are liable.
a. Intent to give consent
- Applying the rules of consent with regard
to contracts because negotiable
instruments fall within the law on
contracts.
- Only sign with consent that is valid and this
is not bound by technical rules regardless
of how it appears.
- Consent must be freely, wilfully, and
voluntarily given to be valid.
b. Form of signature
- The form of signature is not important as
long as the person signing the instrument
signed it with the intent of having it bound
to him.
-
c. Trade or Assumed Name
- Only persons whose signatures appear on
the instrument are liable except persons
who signs in trade or assumed name (Sec.
18, NIL)
- Business name or other names used to
pertain to a trade or business other than
the personal name of the signatory.
- A person who signs in a trade name or
assumed name has the liability of a person
who signed the instrument in his own
name.
- It is necessary that the party intended to be
bound to it.
- Assumed name may refer to an alias, or an
alternative, false or fictitious name.
d. Agency
- It is a contract where one person performs
an act in representation of another. The
agent must disclose identity of his principal
except:
o Causes damage or injury to the
principal
o Puts the principal at risk
o Be in violation of lawyer-client
privilege
o Be in violation of the Data Privacy
Act
- SPA is given since the execution may be
construed as an act of strict dominion.
- Only persons whose signatures appear on
the instrument are liable except if a duly
authorized agent signs on behalf of the
principal (Sec. 19, NIL)
- Authority of agent must be shown to have
been given orally or in writing.
- Written power of attorney is only an
evidence of authority

e. Signature by Procuration
- Operates as notice that the agent has but
limited authority to sign, and the principal
is bound only in case the agent in so signing
acted within the actual limits of his
authority (Sec. 21, NIL).
- Principal is not bound if agent exceeded his
authority. If agent acted with abuse of his
authority then the abuse is not a defense
against a bona fide holder for value.
- “ultra vires” – beyond authority
- “intra vires” – within authority
f. Signature Despite Want of Capacity
- Indorsement or assignment of the
instrument by a corporation or an infant
passes the property notwithstanding that
from want of capacity the corporation or
infant may incur no liability thereon (Sec.
22, NIL).
- Contracts entered into by minors are
voidable and minors are not bound by the
indorsements that they make.
- A corporation who has acted ultra vires is
not liable.
g. Forgery and its Effects
- If a signature is forged or made without
authority of the person whose signature it
purports to be, it is wholly inoperative and
no right to retain the instrument, or to give
a discharge, or to enforce payment against
any party can be acquired through or under
such signature, unless the party against
whom it is sought to enforce such right is
precluded from setting up the forgery or
want of authority (Sec. 23, NIL).
- FORGERY – the counterfeit-making or
fraudulent alteration of a writing, and may
consist in the signing of another’s name or
the alteration of an instrument in the name,
amount, description of the person and the
like with intent to defraud.
- Only the signature is inoperative, but the
instrument remains valid and negotiable.
- Effects of Forged Signature
o By drawer/maker – void
o Acceptor – as if it was not yet
accepted
o Indorser – invalid indorsement
o Produces no right to return or give
a discharge.
- Even a holder in due course is affected.
Accommodation Party
- A party who signed the instrument as
maker, drawer, acceptor, or indorser,
without receiving value of the instrument
and for the purpose of lending his name to
some other person and such
accommodation party is liable on the
instrument to a holder for value even if the
holder at the time of taking the instrument
knew him to be an accommodation party
only (Sec. 29, NIL).
- He does not receive value for the
accommodation.
- Purpose of lending a creditable name to
the maker, drawer, acceptor, or indorser
who may not possess good credit standing.
- Accommodated party is one in whose favor
a person signs an instrument for the
purpose of lending his credit.
Consideration
- Every negotiable instrument is deemed
prima facie to have been issued for a
valuable consideration and every person
whose signature appears on it is a party for
value (Sec. 24, NIL).
- Consideration is an inducement to a
contract that is the cause, price or
impelling influence which induces a
contracting party to enter into a contract.
- Maker/Drawer – fulfillment of an
obligation
- Payee – receipt of the amount payable
Value
- Any consideration sufficient to support a
simple contract. An antecedent or pre-
existing debt constitutes value; and is
deemed such whether the instrument is
 payable on demand or at a future time
(Sec. 25, NIL)
- A valuable consideration need not be
adequate. It is sufficient if it is a valuable
one.
III. Negotiation of Instruments
Process of Negotiation
- An instrument is negotiated when it is
transferred form one person to another in
such a manner as to constitute the
transferee the holder thereof. If payable to
bearer, it is negotiated by delivery; if
payable to order, it is negotiated by the
indorsement of the holder completed by
delivery (Sec. 30, NIL).
- If an instrument is payable to bearer and is
indorsed specially, then it may be further
negotiated by delivery; but the person
specially indorsing is liable as indorser to
only such holders as make title through his
indorsement (Sec. 40, NIL)
- Non-negotiable instruments cannot be
negotiated, but may be transferred by Sale,
Donation, Succession, Assignment, and
other applicable modes of acquisition of
property.
- The title to the money does not pass to
transferee if non-negotiable instruments
has been transferred by negotiation or if
improperly negotiated.
Indorsement of Instruments
- Indorsements must be written on the
instrument itself or upon a paper attached
thereto. The signature of the indorser,
without additional words, is a sufficient
indorsement (Sec. 31, NIL)
- The indorsement of the instrument must
be in its entirety any instrument purporting
to transfer only partial part of the
instrument is void unless the partial
transfer is on account of the remaining
value to be paid (Sec. 32, NIL).
Kinds of Indorsements
1. Special Indorsements
- Indorsements that specifies the name of
the person to whom or to whose order the
instrument is to be payable is a special
indorsement (Sec. 34, NIL).
- It specifies the indorsee and saves the
transferee the use of the instrument.
2. Blank Indorsements
- Indorsements that specifies no indorsee
and an instrument indorsed is payable to
bearer and may be negotiated by delivery
(Sec. 34, NIL).
- No specification of recipient. Transform
instruments to bearer instrument.
3. Restrictive Indorsements
- An indorsement is restrictive if it:
o Prohibits further negotiation of
the instrument
o Constitutes the indorsee the agent
of the indorser
o Vest the title in the indorsee in
trust for or to the use of some
other person
Mere absence of words implying
power to negotiate does not make an
indorsement restrictive (Sec. 36, NIL).
- It is a special indorsement because it
specifies the payee.
- It ends the negotiability of the instrument.
4. Qualified Indorsements
- It constitutes the indorser as a mere
assignor of the title to the instrument. It
does not impair the negotiability of the
instrument (Sec. 38, NIL).
- It negates the liability of the indorser.
- It merely transfer the rights of the holder.
- A qualified indorser does not become
secondarily liable.
5. Conditional Indorsements
 - An indorsement where the indorser
imposes some other conditions to his
liability or on the indrosee’s right to collect
the proceeds of the instrument.
- It has no effect on the further negotiation
of the instrument and is binding only
between the indorser and indorsee.
- If it is conditional, a party required to pay
the instrument may disregard the
condition and make the payment to the
indorsee or his transferee whether the
condition has been fulfilled or not, but any
person to whom the instrument is
negotiated will hold the same or the
proceeds subject to the rights of the
person indorsing conditionally (Sec. 39,
NIL).
Indorsement of a multi-payee instrument
- If the instrument is payable to two or more
persons and it is payable to order of two or
more payees or indorsees who are not
partners, all must indorse unless one
indorsing has authority to indorse for
others (Sec. 41, NIL).
Indorsement in favor of an Officer
- An instrument drawn or indorsed to a
person as an officer of a bank or
corporation is deemed prima facie payable
to the bank or corporation of which the
person is an officer and may be negotiated
by the bank or corporation or by the officer
(Sec. 42, NIL).
**When the name of the payee or indorsee is
wrongly designated or misspelled, he may indorse
the instrument as described by adding his proper
signature if he/she sees fit (Sec. 43, NIL).
Indorsement of an Agent
- Any person under the obligation to indorse
in a representative capacity, he may
indorse in such terms as to negative
personal liability (Sec. 44, NIL).
Indorsement of a Bill in Set
- A bill in set is one composed of several
parts, each part, being numbered and
containing a reference to the other parts,
the whole of the parts constituting but one
bill.
- If a bill is drawn is set, each part is
numbered and contains reference to the
other parts, the whole of the parts
constitutes one bill (Sec. 178, NIL).
- Purpose is to avoid the difficulties which
would arise in case of loss or miscarriage on
the way of the bill.
- All copies are intended to be part of a
group of a bills on a set.
- If not numbered then you have several bills
of exchange.
- All pieces of the bill of exchange must be
delivered if issued and delivered if
negotiated. If all parts are not delivered on
negotiation the holder may demand it.
- If two or more parts of the set are
negotiated to different holders in due
course, the holder WHOSE TITLE FIRST
ACCRUES is as between holders the true
owner of the bill, but it does not affect the
rights of a person, who in due course
accepts or pays the part first presented to
him (Sec. 179, NIL).
- Where the holder indorses two or more
parts to a different person then he is liable
on each part and every indorser
subsequent to him is liable on the part that
they indorsed as if it were all separate bills
(Sec. 180, NIL).
- Acceptable of a bill drawn in sets may be
written on any part and it must be written
ON ONE PART ONLY. If the drawee accepts
more than one part then drawee is liable on
every part as if it were a separate bill (Sec.
181, NIL).
- All documents must be original.
- If one part is paid then all other
instruments are discharged.
- If the acceptor of a bill in set pays without
requiring the part with his acceptance be
delivered up to him and that part is with a
holder in due course upon maturity then he
 is liable to the holder in due course (Sec.
182, NIL).
Presumption of Time of Indorsement
- An indorsement is presumed to have been
made at the place where the instrument is
dated (Sec. 45, NIL).
- The place is important if there are different
laws in place such as it was indorsed
abroad.

Dishonor of Instrument
- An instrument can be dishonour if
(promissory note) there was a violation of
the promise to pay or refusal to honor
promise to pay; if (bill of exchange) refusal
of the drawee to consent to the order of
the drawer to pay or dishonor by non-
acceptance.
- If there is refusal of the acceptor to pay
after instrument is accepted then it is
dishonor by non-payment.

Notice of Dishonor
- It should contain:
o Address of the person secondarily
liable
o That instrument is dishonoured
o Demand for payment within 5 days

**actual notification is needed

- An immediate right of recourse/alternative

remedy
- Without notice of dishonor the person
secondarily liable will be discharged.