Parties to Negotiable Instruments

Parties to Negotiable Instruments

Parties to Bill of Exchange 

1. Drawer: The maker of a bill of exchange is called the ‘drawer’. 

2. Drawee: The person directed to pay the money by the drawer is called the ‘drawee’, 

3. Acceptor: After a drawee of a bill has signed his assent upon the bill, or if there are more parts than one, upon one of such pares and delivered the same, or given notice of such signing to the holder or to some person on his behalf, he is called the ‘ acceptor’. 

4. Payee: The person named in the instrument, to whom or to whose order the money is directed to be paid by the instrument is called the ‘payee’. He is the real beneficiary under the instrument. Where he signs his name and makes the instrument payable to some other person, that other person does not become the payee. 

5. Indorser: When the holder transfers or indorses the instrument to anyone else, the holder becomes the ‘indorser’. 

6. Indorsee: The person to whom the bill is indorsed is called an ‘indorsee’. 

7. Holder: A person who is legally entitled to the possession of the negotiable instrument in his own name and to receive the amount thereof, is called a ‘holder’. He is either the original payee, or the indorsee. In case the bill is payable to the bearer, the person in possession of the negotiable instrument is called the ‘holder’. 

8. Drawee in case of need: When in the bill or in any endorsement, the name of any person is given, in addition to the drawee, to be resorted to in case of need, such a person is called ‘drawee in case of need’. In such a case it is obligatory on the part of the holder to present the bill to such a drawee in case the original drawee refuses to accept the bill. The bill is taken to be dishonoured by non-acceptance or for nonpayment, only when such a drawee refuses to accept or pay the bill. 9. Acceptor for honour: In case the original drawee refuses to accept the bill or to furnish better security when demanded by the notary, any person who is not liable on the bill, may accept it with the consent of the holder, for the honour of any party liable on the bill. Such an acceptor is called ‘acceptor for honour’. 

 Parties to a Promissory Note 

1. Maker.-He is the person who promises to pay the amount stated in the note. He is the debtor.

 2. Payee -He is the person to whom the amount is payable i.e. the creditor. 

3. Holder -He is the payee or the person to whom the note might have been indorsed.

4. The indorser and indorsee (the same as in the case of a bill).

Parties to a Cheque 

1. Drawer -He is the person who draws the cheque, i.e., the depositor of money in the bank.

 2. Drawee -It is the drawer’s banker on whom the cheque has been drawn. 

3. Payee -He is the person who is entitled to receive the payment of the cheque. 

4. The holder, indorser and indorsee (the same as in the case of a bill or note).