Report No. 11
77. Section 27.-
No change has been proposed in section 27 except, that instead of the words "as mentioned in section 26" explanatory words have been substituted to elucidate the meaning of the section that anybody who is capable of being bound by a transaction relating to a negotiable instrument may be so bound either by his own act or by the act of his duly authorised agent.
78. We have introduced a new provision relating to partners to make it clear that the partner's authority extends to bind all the partners of the firm in the case of an instrument made in the name of the firm. If it is not made or drawn in the name of the firm, the other partners cannot be made liable.1
1. Rangaraju v. Devi Chand, AIR 1945 Mad 439.
79. We have introduced a separate Chapter1 on liability of parties and included all the provisions of the Act relating to liability in that Chapter. A negotiable instrument is a composite contract. There is the original contract under which the instrument is made and added to it are the supervening contracts of the acceptor in the case of a bill and indorsers in the case of all instruments. The liability of the original parties is different from that of the subsidiary parties under supervening contracts. The liability of the different parties arises if and when certain conditions are fulfilled by the holder. We have first defined the liability of each of the parties and then stated the conditions under which such liability arises.
1. Ch V of App I.
The manner and method of carrying out the conditions such as presentment for acceptance in the case of bills, presentment for payment, notice of dishonour for non-acceptance and non-payment and the circumstances under which such presentment either for non-acceptance or non-presentment is excused have been relegated to separate chapters as they are more or less of a procedural character though quite essential to the accrual of the liability. This is made clear in an introductory provision.1
1. Section 54. App I.
80. The position of a stranger signing an instrument and his liability are nowhere stated in the Act. A. presumption is laid down in section 63 of the American Uniform Negotiable Instrument Law that such a person should be presumed to be an indorser unless a contrary intention is expressed. In our opinion, this presumption is founded on sound principle and is conducive to the certainty of the law. We have, accordingly, inserted a new section1 embodying this presumption.
1. Section 54, App I.