Question
Highlight six ways in which a bill of exchange might be discharged.
Answer
Highlight six ways in which a bill of exchange might be discharged.
i) Payment in due course
Payment in due course means payment made at or after the maturity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective.
ii) When Acceptor becomes holder at maturity (Merger)
When the acceptor becomes the holder of it at or after its maturity, in his own right the bill is discharged.
iii) Express Waive/ Renunciation
A bill is discharged if at or after its maturity the holder expressly and absolutely renounces his rights against the acceptor either in writing or by delivering the bill to him.
iv) Cancellation
A bill is discharged by an apparent intentional cancellation by the holder or his agent.
Cancellation is effective only if it is obvious. Where a bill which has been torn into two pieces and is picked up and mended, a holder in due course who takes it in good faith can enforce it.
v) Material alteration
Where a bill is materially altered without the assent of all parties liable on the bill, the bill is avoided, except as against a party who has him made, authorized or assented to the alteration and subsequent endorsers. If alteration is not apparent a holder in due course may endorse payment of the bill according to his original tenor. Material alteration is an alteration of:-
i) the date of payment
ii) the sum payable
iii) the place of payment and consent of the acceptor
iv) where the bill has been accepted generally, the addition of a place of payment without the consent of the acceptor
