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Report No. 11

Chapter XIII

Conflict of Laws

108. Law governing liability of maker, acceptor or indorser of a foreign instrument.-

Where an instrument made or drawn in one country is negotiated, accepted or payable in another, the rights, duties and liabilities of the parties shall, in the absence of a contract to the contrary, be determined as follows3-

(a) all questions relating to the capacity of the parties and the validity of the instrument or of its acceptance or negotiation, shall be governed by the law of the place where the contract constituted by the instrument, acceptance, or negotiation, as the case may be, was made:1

1. Section 72(1), BEA.

[Section 134, part, modified]

Provided that-

(i) if an instrument is made, drawn, accepted or indorsed outside India but in accordance with the law of India, the circumstance that any agreement evidenced by such instrument is invalid according to the law of the country wherein it was entered into does not invalidate any subsequent acceptance made thereon within India;

[Section 136]

(ii) a foreign instrument shall not be invalid or inadmissible in evidence by reason only of its not being stamped according to the law of the place where it was made;1

1. See section 72(1), proviso (a), BEA.

(b) the law of the place where such instrument is payable shall govern-

[Section 134, part, modified]

(i) the liability of all parties to the instrument;

(ii) the duties of the holder with respect to presentment for acceptance or payment;

(iii) the date of maturity;

(iv) what constitutes dishonour by non-acceptance or by non-payment;

[Section 135, part]

(v) the necessity for and sufficiency of a protest or notice of dishonour; [Section 135. part]

(vi) all questions relating to payment and satisfaction, including the currency in which and the rate of exchange at which the instrument is to be paid.

Negotiable Instruments Act, 1881 Back

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