Report No. 11
81. Discharge by material alteration.-
(1) Where an instrument or the acceptance of a bill is materially altered without the assent of all the parties liable on it, the instrument or bill is discharged, except as against the party who has himself made, authorised or assented to the alteration and subsequent indorsers:
Provided that this section shall not apply where the alteration was made by a stranger without the consent of or any negligence or fraud on the part of the holder, or where the alteration was made in order to carry out the common intention of the original parties.
[Section 87, para. 1, modified]
(2) Any such alteration, if made by an indorsee, discharges his indorser from all liability to him in respect of the consideration for the indorsement.
[Section 87, para. 2]
(3) The provisions of this section are subject to those of sections 20, 36, 80, 123 and 145.
[Section 87, para. 3]
(4) An acceptor or indorser of an instrument is'bound by his acceptance or indorsement notwithstanding any previous alteration of the instrument.