Section 40
Discharge of indorser's liability.
The Negotiable Instruments Act, 1881
About this Act
An Act to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques.
Where the holder of a negotiable 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.
Illustration
A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:--
First indorsement, "B".
Second indorsement, "Peter Williams".
Third indorsement, "Wright & Co".
Fourth indorsement. "John Rozario".
This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.
Illustration
A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:--
First indorsement, "B".
Second indorsement, "Peter Williams".
Third indorsement, "Wright & Co".
Fourth indorsement. "John Rozario".
This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.