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Section 37 - Maker, drawer and acceptor principals, Section 38 - Prior party a principal in respect of each subsequent party : Negotiable Instruments Act 1881

 

 

What is Maker, drawer and acceptor principals? What is the meaning of Prior party a principal in respect of each subsequent party? Maker, drawer and acceptor principals and Prior party a principal in respect of each subsequent party are defined under Section 37 and 38 of Negotiable Instruments Act 1881

Section 37 of Negotiable Instruments Act 1881: "Maker, drawer and acceptor principals"

The maker of a promissory note or cheque, the drawer of a bill of exchange until acceptance, and the acceptor are, in the absence of a contract to the contrary, respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, drawer or acceptor, as the case may be.

 

Section 38 of Negotiable Instruments Act 1881: "Prior party a principal in respect of each subsequent party"

As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.

Illustration
A draws a bill payable to his own order on B, who accepts. A afterwards indorses the bill to C, C to D, and D to E. As between E and B, B is the principal debtor, and A, C and D are his sureties. As between E and A, A is the principal debtor, and C and D are his sureties. As between E and C, C is the principal debtor and D is his surety.

 

Negotiable Instruments Act 1881

Section 21 - At sight, On presentment, After sight

Section 22 - Maturity

Section 23 - Calculating maturity of bill or note payable so many months after date or sight

Section 24 - Calculating maturity of bill or note payable so many days after date or sight

Section 25 - When day of maturity is a holiday

 

 

CHAPTER III
PARTIES TO NOTES, BILLS AND CHEQUES

Section 26 - Capacity to make, etc., the promissory notes, etc

Section 27 - Agency

Section 28 - Liability of agent signing

Section 29 - Liability of legal representative signing

Section 30 - Liability of drawer

 

 

Section 31 - Liability of drawee of cheque

Section 32 - Liability of maker of note and acceptor of bill

Section 33 - Only drawee can be acceptor except in need or for honour

Section 34 - Acceptance by several drawees not partners

Section 35 - Liability of indorser

Section 36 - Liability of prior parties to holder in due course

 

 

Section 37 - Maker, drawer and acceptor principals

Section 38 - Prior party a principal in respect of each subsequent party

Section 39 - Suretyship

Section 40 - Discharge of indorser's liability : Negotiable Instruments Act 1881

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