Report No. 11
78. Other modes of discharge.-
(1) The maker, drawer, acceptor or indorser respectively of an instrument is discharged from liability thereon-
(a) to a holder thereof who cancels such acceptor's or indorser's signature with intent to discharge him and to all parties claiming under such holder;
(b) to a holder thereof who otherwise discharges such maker, drawer, acceptor or indorser, and to all parties deriving title under such holder after notice of such discharge;
(c) when the person liable thereon as principal debtor becomes the holder thereof at or after its maturity in his own right.
[Section 90, modified]
(2) When the holder of an accepted bill enters into any contract zvith the acceptor of the nature referred to in section 62, the other parties are discharged, unless the holder has expressly reserved his right to charge them.
(3) When the holder of an instrument, without the consent of the indorser, destroys or impairs the indorser's remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity. [Section 40]