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negotiable-instruments:acceptance-of-a-bill-of-exchange

Acceptance of a Bill of Exchange

Section 33 and section 34 of the Negotiable Instruments Act,1881 deals with acceptance of a Bill of Exchange. Lets deal with these sections one by one.

Only drawee can be acceptor except in need or for honour

Section 33 of the Negotiable Instruments Act,1881.

No person except the drawee of a bill of exchange, or all or some of several drawees, or a person named therein as a drawee in case of need, or an acceptor for honour, can bind himself by an acceptance.

Who can accept

A bill of exchange is an order by the the drawer upon another, i.e, the drawee, to pay a certain sum and, therefore, the person, upon whom, the order is thus made, is the only person who can accept it and bind himself. When the drawee is named in the bill a third person who is not named in the bill, that is to say, whose name does not appear in the bill as drawee, is not competent to accept and, therefore, even if a person who is not a drawee and whose name is not in the instrument accepts the bill, i.e , writes the word, accepted, across the bill no liability attaches to him. But where no drawee is named in the instrument and it is accepted by a person, such person will be deemed to acknowledge that he is the drawee and will be held liable, as an acceptor for honour under section 108.

When several drawees

If the bill is drawn against more than one person all or some of them can accept it and the liability will be that of the person or persons who so accept and not of those who do not accept. The acceptance should be made in the same capacity in which he is made the drawee, otherwise, the acceptance will not be valid. Thus, where a person against whom a bill of exchange is drawn by name, accepts it for or on behalf of a corporation of which he is a member there is no valid acceptance of the bill.

Other acceptances

Where an instrument shown to be on its face a hundi or a bill of exchange was really a promissory note and was accepted by the defendants with the words “accepted payable on due date” at the top, it was held that the defendants by their acceptance admitted themselves to be drawees and so were estopped from denying liability. A bill drawn on A through his agent B can be accepted by A. A bill drawn against two or more partners as such may be accepted by any one of the said partners. But for a bill drawn against a firm, if it is accepted by a partner in his own name, he will be personally liable but not the firm. A person to whom the holder is directed to resort in case of need, is called a drawee in case of need and can accept without previous protest under section 116 of the Act.

Acceptance by several drawees not partners

Section 34 of the Negotiable Instruments Act,1881.

Where there are several drawees of a bill of exchange who are not partners, each of them can accept it for himself, but non of them can accept it for another without his authority.

It has already been stated that when a bill is drawn against two or more persons as partners acceptance by one as such will bind the rest. This is under the rule of authority that one partner has to accept for another. Therefore, where the drawees are not partners acceptance can bind only the acceptor personally unless special authority is proved to accept the instrument for others.

Created on 2021/02/14 06:45 by LawPage • Last modified on 2021/02/14 06:45 by LawPage