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negotiable-instruments:note:drawee-in-case-of-need

Drawee in case of need

Section 115 of the Negotiable Instruments Act,1881.

Where a drawee in case of need is named in a bill of exchange, or in any indorsement thereon, the bill is not dishonoured until it has been dishonoured by such drawee.

The section deals with dishonour of bills by a drawee in case of need. A bill is said to be dishonoured by non-acceptance when the drawee makes default in acceptance after presentment to him. Presentment is essential where it is not excused. Therefore, dishonour of a bill by a drawee in case of need implies that the bill has to be presented before him for acceptance. This section makes the presentment to the drawee in case of need obligatory on the holder and the non-presentment of the bill to him absolves the drawer from all liability. Such presentment is to be made within a reasonable time like presentment to an acceptor for honour.

Acceptance and payment without protest

Section 116 of the Negotiable Instruments Act,1881.

A drawee in case of need may accept and pay the bill of exchange without previous protest.

Previous protest is not necessary in case of acceptance and payment of a bill by a drawee in case of need. When a drawee in case of need pays the bill the drawer becomes liable to him for the full amount.