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Dishonour By Non-Acceptance
NOTICE OF
DISHONOUR
Notice of dishonour refers to formal communication,
oral or written, of the fact of dishonour. When a
negotiable instrument is dishonoured either by nonacceptance or non-payment, the holder should give
notice of the dishonour to all the parties, he seeks to
hold liable. A notice of dishonour has its own
significance. If it is not given to the drawer and
endorsers, it will discharge them all from liability not
only on the bill or pro-note but also with regard to the
original consideration. Such notice also enables a
person (drawer) so notified to protect himself/herself as
against the drawee or acceptor who has illegitimately
dishonoured the instrument issued by him/her.
7.Reasonable
time
for
transmitting such notice:
A party receiving notice of dishonour,
who seeks to enforce its rights
against a prior party, transmits the
notice within a reasonable time if it
transmits the notice within the same
time after its receipt as it would have
had to give notice if it had been the
holder (Sec. 107).