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Discharge of a Negotiable

InstrumentThe term discharge in

relation to a

negotiableinstrument is used intwo sense ,

1. Discharge of the

instrument.2. Discharge of one or

more of parties fromliability theorm.

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Different Modes of discharge of anInstrument

By payment in due course.

By party primarily liable becoming holder. By express waiver.

By cancellation.

By discharge as a simple cotract.

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By payment in due course theinstrument is dischared by the payment made indue course by the party who is primarily liable topay (the maker and acceptor) , or by a personwho is accodateted in case the instrument wasmade or accepted for his accomodation.

Payment of interest ---if the rate ofinterest is specified in promissory note or bill ofexchange interest shall be calculated on theprincipal amt of specified rate.

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By party primarily liable becomingholder---If the maker of the note or acceptorof a bill becomes its holder at or after its

maturity in his own right the instrument isdischarge.

By express waiver---when the holder of anegotiable instrument at or after its maturity

absolutely and unconditionally renounces inwriting or gives up his right against all theparties to the instrument , the instrument isdischared. The renunication must be writingunless the instrument is delivered upto the party

primarily liable.

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By Cancellation---where an instrument isintenionally cancelled by the holder or his agent

and the cancellation s apparent, the instrumentis discharge. Cancellation may take place by thecrossing of signature on the instrument.

By discharge as a simple contract--- a

negotiable instrument may be dischargeed in thesame way as any other contract for the paymentof money.

Example- by expiry period of limitation.

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DISCHARGE OF A PARTY ORPARTIES

By payment.

By cancellation

By release By allowing drawee more than 48 hours.

By non presentment of cheque

Cheque apyable to order.

Draft drawn by one branch on another.

By operation of law.

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By allowing drawee more than 48 hours--- ifthe holder of bill of exchange allow the drawee more than 48 hoursexclusive of public holidays , to consider wheather he will accept thesame,all previous parties not consenting to such allowance are

therby discharged. By non presentment of cheque--- where the

cheque is not presented by the holder for payment within theresonable time of its issue and the drawer suffers actual damagethrough the delay bcoz of its failure of the bank.

Cheque payable to order--- when the cheque payableto order purpots to be indorsed by the payeethe banker isdischarged by payment course.where the cheque is originallyexpressed to be payable to bearer than the drawee is discharged.

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By payment--- when the payment is madeon an instrument due course ,both theinstrument and parties to it discharged.

By cancellation---when the holder ofnegotiable instrument or his agen cancel thename of the party with intent to discharge himsuch party nd all subsequent parties

By release--- when the holder release anyparty to the instrument by any method otherthan cancellation the party so released isdischarge from liability.

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Draft drawn by one branch onanother--- where any draft drawn by any

office of a bank upon another anotheroffice of the same bank for a sm of moneypayable to order on demand prpots to beindorsed by behalf of the payee, the bank

is discharged. By operation of law--- by an order of

insolvency court , by merger , by lapse of

time.

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