Briefly explain the effects of dishonour and noting of a bill of exchange.
Briefly explain the effects of dishonour and noting of a bill of exchange.
Dishonour of a bill means refusal to pay or inability to pay by the debtor because of insolvency. In other words, a bill is said to have been dishonoured when the drawee fails to make the payment on the date of maturity. In this situation, the liability of the acceptor is restored. When a bill is dishonoured, it is always better to get it certified by a notary which is known as noting.
So, it is an ample proof that a bill is dishonoured which is noted down on the face of it. For this, the noting charges something known as notary charges or noting charges which may be recovered from the person who is responsible for the dishonour of the bill.
The notary is compulsory in case of a foreign bill as required under the law of that country whereas it is not so in case of inland bills. It is done with a view to have a proof of dishonouring the bill. So, it is very useful. Notary has to assign reasons for dishonour of a bill along with the date of dishonour and charges made by him. It is to be noted that whosoever pays the noting charges, ultimately these have to be borne by the drawee.
Dishonour of a bill means refusal to pay or inability to pay by the debtor because of insolvency. In other words, a bill is said to have been dishonoured when the drawee fails to make the payment on the date of maturity. In this situation, the liability of the acceptor is restored. When a bill is dishonoured, it is always better to get it certified by a notary which is known as noting.
So, it is an ample proof that a bill is dishonoured which is noted down on the face of it. For this, the noting charges something known as notary charges or noting charges which may be recovered from the person who is responsible for the dishonour of the bill.
The notary is compulsory in case of a foreign bill as required under the law of that country whereas it is not so in case of inland bills. It is done with a view to have a proof of dishonouring the bill. So, it is very useful. Notary has to assign reasons for dishonour of a bill along with the date of dishonour and charges made by him. It is to be noted that whosoever pays the noting charges, ultimately these have to be borne by the drawee.
