Meaning of the term “holder” in relation to a bill of exchange and the duties of a holder of a bill of exchange

A “holder” is a person who is in possession of a bill as of right either as the payee or endorsee or bearer.
A bona fide holder acquires a defect free title and can sue on it in his own name.
A holder of a bill may be a holder for value or holder in due course.
The obligations of a holder of a bill depend on the point at which the bill is held. These duties include:

  1. Presentation for acceptance: the holder is bound to present the bill to the drawee for acceptance. This duty arises where the holder receives a bill which has not been accepted.
  2. Presentation for payment: it is the duty of the payee to present the bill to the acceptor for payment. It must be presented within a reasonable time of negotiation or on the date it falls due or within the three days of grace. Presentation for payment is essential for all bills and mandatory in every case unless excused.
  3. Notice of dishonour: in the event of dishonour the payee is bound to notify the party or parties liable that the bill has been dishonoured.
    No particular form of notice is essential. It may be verbal or written.
  4. Noting and protesting: If a foreign bill is dishonoured, by nonacceptance or non-payment the payee is bound to have the same noted and protested by a notaries public. Failing which the drawer and endorsers are discharged.
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