What is Liability of indorser? What is Liability of prior parties to holder in due course? Liability of indorser and Liability of prior parties to holder in due course are defined under Section 35 and 36 of Negotiable Instruments Act 1881
In the absence of a contract to the contrary, whoever indorses and delivers a negotiable instrument before maturity without, in such indorsement, expressly excluding or making conditional his own liability, is bound thereby to every subsequent holder, in case of dishonour by the drawee, acceptor or maker, to compensate such holder for any loss or damage caused to him by such dishonour, provided due notice of dishonour has been given to, or received by, such indorser as hereinafter provided.
Every indorser after dishonour is liable as upon an instrument payable on demand
Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.
Negotiable Instruments Act 1881
Section 21 - At sight, On presentment, After sight
Section 23 - Calculating maturity of bill or note payable so many months after date or sight
Section 24 - Calculating maturity of bill or note payable so many days after date or sight
Section 25 - When day of maturity is a holiday
CHAPTER III PARTIES TO NOTES, BILLS AND CHEQUES
Section 26 - Capacity to make, etc., the promissory notes, etc
Section 28 - Liability of agent signing
Section 29 - Liability of legal representative signing
Section 30 - Liability of drawer
Section 31 - Liability of drawee of cheque
Section 32 - Liability of maker of note and acceptor of bill
Section 33 - Only drawee can be acceptor except in need or for honour
Section 34 - Acceptance by several drawees not partners
Section 35 - Liability of indorser
Section 36 - Liability of prior parties to holder in due course
Section 37 - Maker, drawer and acceptor principals
Section 38 - Prior party a principal in respect of each subsequent party
Section 40 - Discharge of indorser's liability : Negotiable Instruments Act 1881