Legal Aspects Assignment 1

Q.5. a).A endorsed a cheque in blank in favour of B who becomes its holder. He
negotiates it in favour of C and C transferred this to D without endorsement. In the
event of dishonor, explain the position of D.
Answer:
A is the drawer of the cheque (account holder)
B is the payee and holder. Since B negotiates in favour of C..
C is also holder in due course. Since C has transferred this without endorsement D is not
holder in due course.
In the event of dishonour of cheque, D cannot claim from A, B, or C.

b) A is holder of a cheque who endorses sans recourse to B and B to C and C to

D who endorses to E. Cheque is dishonored. Explain the position of E as holder in
due course and mention the parties against whom he can claim the money.
Answers:
A is the holder. A endorses without any recourse or liability to B.
The cheque is transferred from B to C. From C to D. From D with endorsement to E.
E can claim the money from D, C, or B since they have transferred without condition.
They have transferred without saying sans recourse. E or D or C or B cannot claim
money from A.

Legal Aspects Assignment 2

Q.2. X issues a cheque in favour of Y and puts a condition that the payment is to be
made only when Y fulfills a condition. Y obtains the payment from the bank without
compliance of this condition. X demands damages from the bank for not ensuring the
compliance. What is conditional endorsement and how is it effective between the
parties mentioned above?

Answers:
When drawer/holder of cheque puts a condition while endorsing in favour of other person
or persons, that the endorsee should fulfill a condition mentioned in order to get the
payment of the cheque. If condition is not fulfilled the endorsee is not entitled for
payment of cheque. Such endorsement is conditional endorsement.

In the example given above,

X is the account holder/drawer of cheque.
Y is a conditional holder, has to fulfill the condition in order to get payment.
Y will become holder in due course if he fulfills the condition.
Hence bank who has made payment to Y, without complying or not ensuring compliance
of condition by Y, has to pay damages or compensates to X. Bank in turn can
claim/recover amount of cheque from Y.
In other words Y is not entitled for payment of cheque since he has not fulfilled the
condition put by X.

b). Explain the objectives statutory meeting as per companies Act.