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Acceptor or indorser bound notwithstanding previous alteration

Section 88 of the Negotiable Instruments Act,1881.

An acceptor or indorser of a negotiable instrument is bound by his acceptance or indorsement notwithstanding any previous alteration of the instrument.

According to the section 87 it is only those persons who are parties to the instrument at the time of the alteration who will be discharged from liability and not those who become parties to it after the alteration. The present section specifically lays down what follows from the last section, namely, that persons who with or without knowledge of the alteration become parties to the altered contract cannot complain of the alteration.

These subsequent parties will be bound by the terms of the altered document i.e. they will be bound to pay according to the tenor of the instrument at the time of their contract.

A drawee of a bill cannot substitute a third party in his place and if a third party is substituted in the place of the drawee his acceptance will not render him liable.1)

Jagannath v Heap & Co., 2 I.C. 804 15