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An indorser delivers a negotiable instrument before maturity without limiting liability, and there is…

Section 35 makes an indorser who indorses and delivers the instrument before maturity liable to subsequent holders for loss caused by dishonour if due notice is given or…

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An indorser delivers a negotiable instrument before maturity without limiting liability, and there is no agreement to the contrary. The instrument is dishonoured and the indorser receives due notice. To whom is the indorser liable under Section 35 of the Negotiable Instruments Act, 1881?

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Answer and explanation

Correct answer A

Section 35 makes an indorser who indorses and delivers the instrument before maturity liable to subsequent holders for loss caused by dishonour if due notice is given or received. A contract to the contrary or an express exclusion or qualification in the indorsement can alter that liability.

Option feedback

Option A

Section 35 makes the indorser answer to a subsequent holder for loss or damage caused by dishonour when its conditions are met.

Option B

Section 35 protects subsequent holders rather than the drawer alone.

Option C

The liability described is to subsequent holders and does not follow simply from being a prior indorser.

Option D

The section is not limited to the first payee.

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