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Section 43 - Negotiable instrument made, etc., without consideration, Section 44 - Partial absence or failure of money-consideration : Negotiable Instruments Act 1881

 

 

What is the status of Negotiable instrument made, etc., without consideration? What is Partial absence or failure of money-consideration? Negotiable instrument made, etc., without consideration Partial absence or failure of money-consideration are defined under Section 43 and 44 of Negotiable Instruments Act 1881

Section 43 of Negotiable Instruments Act 1881: "Negotiable instrument made, etc., without consideration"

A negotiable instrument made, drawn, accepted, indorsed or transferred without consideration, or for a consideration which fails, creates no obligation of payment between the parties to the transaction. But if any such party has transferred the instrument with or without indorsement to a holder for consideration, such holder, and every subsequent holder deriving title from him, may recover the amount due on such instrument from the transferor for consideration or any prior party thereto.

Exception I : No party for whose accommodation a negotiable instrument has been made, drawn, accepted or indorsed can, if he has paid the amount thereof, recover thereon such amount from any person who became a party to such instrument for his accommodation.

Exception II : No party to the instrument who has induced any other party to make, draw, accept, indorse or transfer the same to him for a consideration which he has failed to pay or perform in full shall recover thereon an amount exceeding the value of the consideration (if any) which he has actually paid or performed.

 

Section 44 of Negotiable Instruments Act 1881: "Partial absence or failure of money-consideration"

When the consideration for which a person signed a promissory note, bill of exchange or cheque consisted of money, and was originally absent in part or has subsequently failed in part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.

Explanation : The drawer of a bill of exchange stands in immediate relation with the acceptor. The maker of a promissory note, bill of exchange or cheque stands in immediate relation with the payee, and the indorser with his indorsee. Other signers may by agreement stand in immediate relation with a holder.

Illustration

A draws a bill on B for Rs. 500 payable to the order of A. B accepts the bill, but subsequently dishonours it by non-payment. A sues B on the bill. B proves that it was accepted for value as to Rs. 400, and as an accommodation to the plaintiff as to the residue. A can only recover Rs. 400.

 

Negotiable Instruments Act 1881

Section 41 - Acceptor bound, although, indorsement forged

Section 42 - Acceptance of bill drawn in fictitious name

Section 43 - Negotiable instrument made, etc., without consideration

Section 44 - Partial absence or failure of money-consideration

Section 45 - Partial failure of consideration not consisting of money

Section 45A - Holder's right to duplicate of lost bill

 

 

CHAPTER IV
OF NEGOTIATION

Section 46 - Delivery

Section 47 - Negotiation by delivery

Section - 48 Negotiation by indorsement

Section 49 - Conversion of indorsement in blank into indorsement in full

Section 50 - Effect of indorsement

 

 

Section 51 - Who may negotiate

Section 52 -Indorser who excludes his own liability or makes it conditional

Section 53 - Holder deriving title from holder in due course

Section 54 - Instrument indorsed in blank

Section 55 - Conversion of indorsement in blank into indorsement in full

Section 56 - Indorsement for part of sum due

 

 

Section 57 - Legal representative cannot by delivery only negotiate instrument indorsed by deceased

Section 58 - Instrument obtained by unlawful means or for unlawful consideration

Section 59 - Instrument acquired after dishonour or when overdue

Section 60 - Instrument negotiable till payment or satisfaction

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