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Section 40: Discharge of indorser's liability.

The Negotiable Instruments Act, 1881Central Act · Act 26 of 1881

Where the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the indorser's remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity.

Illustration

A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:--

First indorsement, "B".

Second indorsement, "Peter Williams".

Third indorsement, "Wright & Co".

Fourth indorsement. "John Rozario".

This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.

Where this provision sits

ActThe Negotiable Instruments Act, 1881
Section40
Marginal noteDischarge of indorser's liability.
JurisdictionCentral
StatusIn force as published by the source

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