24

Dishonour and Discharge of Negotiable Instruments

CHAPTER OBJECTIVES

After carefully reading this chapter, you will be able:

  • Understand the meaning of dishonour and discharge of negotiable instruments.
  • Enumerate the different types of dishonour.
  • Explain what is meant by notice of dishonour.
  • Understand the meaning of noting and protesting.
  • Explain how a party to an instrument is discharged.

A negotiable instrument is dishonoured in two ways:

  1. By non-acceptance
  2. By non-payment

As a bill of exchange only needs acceptance, it may be dishonoured by non-acceptance. A promissory note, a cheque and a bill may be dishonoured by non-payment. It is the duty of the holder, in case his instrument is dishonoured, to give notice of dishonour to all prior ...

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