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Sec. 89. To whom notice of dishonor must be given. - Except as herein otherwise provided, when a negotiable instrument has been dishonored by non-acceptance or nonpayment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged.
MEANING OF NOTICE
By notice of dishonor is meant bringing either verbally or by writing, to the knowledge of the drawer or indorser of an instrument, the fact that a specified negotiable instrument, upon proper proceedings taken, has not been accepted or hasn¶t been paid, and that the party notified is expected to paid it
NECESSITY AND PURPOSE OF NOTICE
When an instrument is dishonored by NON-ACCEPTANCE or NON-PAYMENT, notice of such dishonor must be given to persons secondarily liable, as the case may be. Otherwise, such parties are discharged
BURDEN OF PROOF
It is upon the plaintiff who seeks to enforce the defendant¶s liability upon a negotiable instrument as indorser to establish said liability by proving that notice was given to the defendant within the time and in the manner required by the law that the instrument in question had been dishonored Where these facts are not proven, the plaintiff doesn¶t sufficiently establish the defendant¶s liability Where there is no proof in record tending to show that the plaintiff gave any notice whatsoever to the defendant that the instrument in question had been dishonored, said plaintiff hasn¶t established its cause of action PERSONS PRIMARILY LIABLE NEED NOT BE NOTIFIED DOES FAILURE TO GIVE NOTICE OF DISHONOR OF A PREVIOUS INSTALLMENT TO PERSONS SECONDARILY LIABLE ALSO DISCHARGE THEM ON THE SUCCEEDING INSTALLMNETS? It depends on whether the instrument contains an acceleration clause
and therefore. The holder 2. and who. or by or on behalf of any party to the instrument who might be compelled to pay it to the holder. NOTICE MAY BE GIVEN BY 1. notice is given The reason is that each separate installment is equivalent to another note RULE WHERE THERE IS AN ACCELERATION CLAUSE It depends whether the clause is optional or automatic If it is automatic. NOTICE OF AGENT . the holder can file an action against them for such succeeding installments. whether that party be his principal or not. the rule would be the same as where there is no acceleration clause EXCEPTIONS TO REQUIREMENT OF NOTICE The law provides for exceptions on failure to give notice would discharge drawer or indorsers Sec. Another in behalf of the holder 3.RULE WHERE THERE IS NO ACCELERATION CLAUSE Where the instrument contains no acceleration clause. By whom given. 91. would have a right to reimbursement from the party to whom the notice is given. . failure to give notice of dishonor on previous installment doesn¶t discharge drawers and indorsers as to the succeeding installments. 90.Notice of dishonor may be given by any agent either in his own name or in the name of any party entitled to given notice. upon taking it up. Notice given by agent. . failure to give notice of dishonor as to a previous installment will discharge the persons secondarily liable as to the succeeding installments If it is optional and it is not exercised.The notice may be given by or on behalf of the holder. Any party to the instrument who may be compelled to pay it to the holder² against any party whom he has a right of reimbursement should such party giving notice pay the instrument 4. Another person in behalf of such party Sec.
who have a right of recourse against the party to whom the notice is given 2. All holders subsequent to the holder giving notice Sec. and who. Effect where notice is given by party entitled thereto. and the principal. even if himself didn¶t give the notice INURES TO THE BENEFIT OF THE FOLLOWING 1. and where it has done so. it inures to the benefit of the holder and all parties subsequent to the party to whom notice is given. 94. or he may give notice to his principal. If he gives notice to his principal. upon taking t up. it inures to the benefit of all subsequent holders and all prior parties who have a right of recourse against the party to whom it is given. MEANING OF BENEFIT Benefit refers to the right to charge the person secondarily liable who received notice The party to whom this benefit inures can charge the party receiving notice of dishonor. . . 92. he must do so within the same time as if he were the holder. Effect of notice on behalf of holder. When agent may give notice.Where the instrument has been dishonored in the hands of an agent. he may either himself give notice to the parties liable thereon. APPLICATION OF THIS SECTION Follows the same principle as the preceding section but this time. it was held that the possession of the check by the cashier was evidence of his agency of the holder to present it for protest Sec. upon the receipt of such notice. would have a right of reimbursement from the party to whom notice is given Sec. 93.Where notice is given by or on behalf of a party entitled to give notice. Notice may be given by the agent and it is not necessary that the agent be authorized by the principal He may give the notice in his name or in the name of his principal A collecting bank may give notice. no notice from the owner is necessary And where the cashier of the drawee bank which had refused to pay a check gave the check to a notary to protest. . the person giving notice is not the holder but a party to the instrument who might be compelled to pay it to the holder. WHEN AGENT¶S NOTICE MUST BE GIVEN . All parties prior to the holder. which was done. has himself the same time for giving notice as if the agent had been an independent holder.Where notice is given by or on behalf of the holder.
AND THAT IT HAS BEEN DISHONORED. When an instrument is dishonored in the hands of an agent. . SUFFICIENT DESCRIPTION OF THE INSTRUMENT TO IDENTIFY IT. he can do either of the following o Directly give notice to the persons secondarily liable thereon o Give notice to his principal If the agent decides to give notice to the principal. it can be supplemented by oral communication stating the things lacking If there is misdescription. fully identified as to the party at the receiving end of the line MANNER OF GIVING NOTICE . it must contain 1. that is.A written notice need not be signed and an insufficient written notice may be supplemented and validated by verbal communication. 95. it would only vitiate the notice if the person is misled thereby NOTICE BY PHONE This could be done however it must be shown that the party to be notified was really communicated with. it will not invalidate it If the notice is written and doesn¶t contain #2 and #3. It may in all cases be given by delivering it personally or through the mails. . and indicate that it has been dishonored by non-acceptance or non-payment. A STATEMENT THAT THE PARTY GIVING NOTICE INTENDS TO LOOK FOR THE PARTY ADDRESSED FOR PAYMENT EFFECTS OF DEFECTS IN NOTICE If the notice is not signed. he must give notice within the time allowed by law as if he were a holder The principal has also the same time to give notice to the persons secondarily liable Sec. 96. Sec. Form of notice. A misdescription of the instrument does not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. and 3.The notice may be in writing or merely oral and may be given in any terms which sufficiently identify the instrument. and 2. FORM AND CONTENTS OF NOTICE It may be oral or in writing Whether oral or in writing. A STATEMENT THAT IT HAS BEEN PRESENTED FOR PAYMENT AND FOR ACCEPTANCE. When notice sufficient.
if there be one. notice may be sent to the last residence or last place of business of the deceased. the notice may be left with anyone found in charge therein Sec. 2. To whom notice may be given. If there be one but he cannot be found with reasonable diligence Sec. Or although his death is known to the party giving notice but there is no personal representative 3. . and if with reasonable diligence.Notice of dishonor may be given either to the party himself or to his agent in that behalf. the notice must be given to a personal representative. REQUISITES FOR NOTICE TO REPRESENTATIVE 1. he must be duly authorized to receive the notice of dishonor AGENT DISTINGUISHED FROM PERSON PRESENT IN ABSENCE OF PARTY Notice to agent must be distinguished from notice attempted to be given to party himself where he is absent at his place of business or residence. If his death is not known to the party giving notice 2. NOTICE MAY BE GIVEN 1. If there be no personal representative. 99. Notice where party is dead. 3. even though there has been a dissolution. To the party himself 2. Death is known to the party giving notice There is a personal representative If with reasonable diligence he could be found WHEN NOTICE MAY BE SENT TO THE LAST RESIDENCE OR PLACE OF BUSINESS 1. Notice to partners.When any party is dead and his death is known to the party giving notice. May be given by personal delivery or by mail Sec. 98. . . In such a case. 97. notice to any one partner is notice to the firm. .Where the parties to be notified are partners. To his agent in his behalf An accommodation indorser is entitled to notice An irregular indorser must also be given notice if he is to be charged And if notice is given to an agent. he can be found.
unless delay is excused as hereinafter provided.Notice may be given as soon as the instrument is dishonored and. Time within which notice must be given.Sec. or has made an assignment for the benefit of creditors. regardless of the indorser¶s knowledge that the maker was in default MAY NOTICE OF DISHONOR BE GIVEN ON THE DATE OF MATURITY? Yes. notice of dishonor must be given after the close of banking hours on the date of maturity PURPOSE OF PROMPT NOTICE . Notice to bankrupt. such notice would be insufficient because an instrument cannot be said to be dishonored for non-payment unless presented and presentment must be made on the date of maturity unless of course.Notice to joint persons who are not partners must be given to each of them unless one of them has authority to receive such notice for the others. must be given within the time fixed by this Act. 102. PROVISION WOULD APPLY ONLY TO JOINT DRAWERS Sec. and notice given before the paper due is premature and insufficient. . MAY NOTICE OF DISHONOR BE GIVEN BEFORE THE DATE OF MATURITY No. 2. presentment is excused But even in such cases. . Where the party secondarily liable has been declared a bankrupt or an insolvent Where he has made an assignment of his properties for the benefits of creditors In such cases. . provided that the instrument has been presented for payment and is has been dishonored But if the instrument is payable at a bank. 101. it is not dishonored if the maker deposits the amount of the instrument before the close of banking hours. the instrument cannot be said to be dishonored by nonpayment unless it is overdue and unpaid Notice of dishonor can be given only after the instrument has been actually dishonored. APPLICATION OF SECTION 1. 100.Where a party has been adjudged a bankrupt or an insolvent. Notice to persons jointly liable. Hence. notice may be given either to the party himself or to his trustee or assignee. notice be given to the party himself or his trustee or assignee Sec.
(TO REACH HIM IN USUAL COURSE THE DAY FOLLOWING) TIME FOR GIVING NOTICE IN GENERAL The law provides for a different period for giving notice of dishonor depending on whether²the party giving notice and the party to receive notice reside in the same place. then within the time that notice would have been received in due course of mail. it must be deposited in the post office in time to go by mail the day following the day of dishonor.Where the person giving and the person to receive notice reside in the same place. it must be given before the usual hours of rest on the day following. or the party giving notice and the party to receive reside in different places MEANING OF ³THE SAME PLACE´ Refers to the corporate limits of a town or city where the presentment is made or where the holder resides EFFECT OF NOTICE GIVEN OUT OF TIME Unless excused. it must be deposited in the post office in time to reach him in usual course on the day following. 104. Where parties reside in different places. Sec. (b) If given at his residence.Where the person giving and the person to receive notice reside in different places. . (c) If sent by mail. . Where parties reside in same place. if it had been deposited in the post office within the time specified in the last subdivision. 103. To give the persons secondarily liable every opportunity to secure themselves such as to enable the party to be charged to preserve and protect his rights against prior parties Sec. it must be given before the close of business hours on the day following. or if there be no mail at a convenient hour on last day. the notice must be given within the following times: (a) If sent by mail. by the next mail thereafter. notice must be given within the following times: (a) If given at the place of business of the person to receive notice. (b) If given otherwise than through the post office. notice given out of time would be considered not to have been given .
then the notice must be sent as follows: (a) Either to the post-office nearest to his place of residence or to the post-office where he is accustomed to receive his letters.Where a party has added an address to his signature. . 108. Notice to subsequent party.Where a party receives notice of dishonor.Notice is deemed to have been deposited in the post-office when deposited in any branch post office or in any letter box under the control of the post-office department. he has. notice may be sent to the place where he is so sojourning. even when there is miscarriage of mail CONCLUSIVE PRESUMPTION Sec. it will be sufficient. notice of dishonor must be sent to that address. the same time for giving notice to antecedent parties that the holder has after the dishonor. But where the notice is actually received by the party within the time specified in this Act. but if he has not given such address. Deposit in post office. Hence. 107. and the . Sec.Where notice of dishonor is duly addressed and deposited in the post office. Sec. . the party to receive notice would be discharged Sec. time of. notice wouldn¶t deemed to have been deposited in the post office Thus. or (c) If he is sojourning in another place.Notice of dishonor may be waived either before the time of giving notice has arrived or after the omission to give due notice. Waiver of notice. 105. Where notice must be sent. . APPLICATION OF SECTION 105 A party giving notice is deemed to have given due notice where the notice of dishonor is duly addressed and deposited in the post office. what constitutes. a notice of protest properly addressed and left in a place in a notary¶s office where mail was usually collected by his postman was held not a mailing of the notice as required by the statute Sec. . notwithstanding any miscarriage in the mails. DEPOSIT IN LETTER BOX The letter box must be under the control of the post office department Otherwise. the sender is deemed to have given due notice. 109. . after the receipt of such notice. though not sent in accordance with the requirement of this section. notice may be sent to either place. or (b) If he lives in one place and has his place of business in another. 106. When sender deemed to have given due notice.
. notice of dishonor is also waived But where notice of dishonor is waived.waiver may be expressed or implied. WHEN WAIVER MAY BE MADE 1. it cannot be given to or does not reach the parties sought to be charged.Where the waiver is embodied in the instrument itself. it binds him only. WHERE PROTEST IS WAIVED. WHEN NOTICE EXCUSED When political disturbances interrupt and obstruct the ordinary negotiations of trade. is deemed to be a waiver not only of a formal protest but also of presentment and notice of dishonor. it is binding upon all parties. . THE FOLLOWING ARE INCLUDED AND ARE DEEMED WAIVED ALSO 1. but. Presentment Notice of dishonor Where presentment for payment is waived.A waiver of protest. 111. 110. declarations. it binds him only Sec. Waiver of protest. Whom affected by waiver. or silence Sec. WHOM AFFECTED BY WAIVER IN GENERAL The persons affected by waiver depends upon whether the waiver is in the instrument itself or is written above the signature of the indorser If the waiver is embodied in the instrument itself. Before the time of giving notice. 2. presentment for payment is not waived Sec.Notice of dishonor is dispensed with when. it is binding upon all parties If the waiver is written above the signature of an indorser. . such as express waiver in the body of the instrument or added to the signature of the party 2. after the exercise of reasonable diligence. After omission to give due notice IMPLIED WAIVER Waiver may be implied from acts. When notice is dispensed with. they constitute a sufficient excuse for want of presentment or notice. whether in the case of a foreign bill of exchange or other negotiable instrument. 112. where it is written above the signature of an indorser. upon the .
or negligence. (d) Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument. When notice need not be given to indorser. how excused. misconduct. Delay in giving notice. . When the cause of delay ceases to operate. Where he has no reason to expect that the instrument will be honored.Delay in giving notice of dishonor is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default. 113. Sec. (b) Where the indorser is the person to whom the instrument is presented for payment. as when he has countermanded payment or where the drawee is fictitious or without capacity to contract NO RIGHT TO EXPECT OR REQUIRE PAYMENT AS TO DRAWER . When notice need not be given to drawer. (b) When the drawee is fictitious person or a person not having capacity to contract. WHEN NOTICE RELATIVELY EXCUSED 1. Sec. (c) Where the instrument was made or accepted for his accommodation.Notice of dishonor is not required to be given to the drawer in either of the following cases: (a) Where the drawer and drawee are the same person. (c) When the drawer is the person to whom the instrument is presented for payment. infectious disease« Sec. and the indorser was aware of that fact at the time he indorsed the instrument. notice must be given with reasonable diligence. ² Notice of dishonor is not required to be given to an indorser in either of the following cases: (a) When the drawee is a fictitious person or person not having capacity to contract.same principle that controls in cases of military operations or interdictions of commerce Prevalence of a malignant. 115. as when he is both the drawee and drawer or when presentment is made to him 2. . 114. (e) Where the drawer has countermanded payment. Where he has knowledge of the dishonor by means other than through a formal notice. contagious.
notice of dishonor need not be given to persons primarily liable in order to charge them 2. .An omission to give notice of dishonor by non-acceptance does not prejudice the rights of a holder in due course subsequent to the omission. When notice is waived b. But the fact that that the indorser knew the maker to be insolvent or that the instrument was dishonored doesn¶t dispense with the necessity of notice Sec. . Otherwise. 116. Effect of omission to give notice of non-acceptance. An allegation that payment of a check had been countermanded is sufficiently set out where the check was set forth with the indorsement across the face ³Payment stopped´ DRAWEE FICTITIOUS. ETC. In the foregoing.Where any negotiable instrument has been dishonored. 2. Sec. 3. 118. notice of a subsequent dishonor by nonpayment is not necessary unless in the meantime the instrument has been accepted. when must be made. F holder need not give notice to A drawer. As to indorser. As to a holder in due course without notice Sec. When protest need not be made. MUST BE MADE KNOWN AS TO INDORSERS The indorser must be aware of the fact that the drawee is fictitious or not having capacity to contract. As to drawer. Like presentment for payment. Where the drawer of the check has no account with the drawee bank When the drawer of a check payable abroad has no funds with the drawee bank to meet it When the knowledge that previous drafts on the same consignee had been dishonored.Where due notice of dishonor by non-acceptance has been given. it may be protested for non-acceptance or nonpayment. as the case may be. the drawer has no right to receive notice of dishonor DRAWER HAS COUNTERMANDED PAYMENT A drawer tells drawee B not to pay the bill. Where due notice of dishonor by non-acceptance has been given f. Notice of non-payment where acceptance refused. But aside from presentment for payment to persons primarily liable. 117.1. but protest is not required except in the case of . notice of dishonor must be given to such indorser to charge him. SUMMARY AS TO NOTICE OF DISHONOR 1. under Section 114 d. . When dispensed with under Section 112 c. notice of dishonor to persons secondarily liable is necessary to charge the latter except² a. under Section 115 e.
it is usual to protest these instruments also when dishonored since the notary¶s certificate of protest is the most convenient and certain mode of proving the facts . other evidence is competent on these questions While protest is not required in cases of promissory notes and inland bills. WHEN PROTEST NECESSARY Protest is necessary with regard foreign bills of exchange Mere fact of protest is not conclusive upon the dishonor of the instrument and due notice to the indorser.foreign bills of exchange.
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