Section 51 - Who may negotiate, Section 52 -Indorser who excludes his own liability or makes it conditional : Negotiable Instruments Act 1881

Who may negotiate? Is Indorser who excludes his own liability or makes it conditional? Who may negotiate and Indorser who excludes his own liability or makes it conditional are defined under Section 51 and 52 of Negotiable Instruments Act 1881 

 

Section 51 of Negotiable Instruments Act 1881: "Who may negotiate Indorser who excludes his own liability or makes it conditional"

Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in section 50, indorse and negotiate the same.

Explanation : Nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he is in lawful possession or is holder thereof; or enables a payee or indorsee to indorse or negotiate an instrument, unless he is holder thereof.

Illustration
A bill is drawn payable to A or order. A indorses it to B, the indorsement not containing the words "or order" or any equivalent words, B may negotiate the instrument.

 

Section 52 of Negotiable Instruments Act 1881: "Who may negotiate Indorser who excludes his own liability or makes it conditional"

The indorser of a negotiable instrument may, by express words in the indorsement, exclude his own liability thereon, or make such liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen.

Where an indorser so excludes his liability and afterwards becomes the holder of the instrument, all intermediate indorsers are liable to him.

Illustrations
(a) The indorser of a negotiable instrument signs his name, adding the words?"Without recourse".

Upon this indorsement he incurs no liability.
(b) A is the payee and holder of a negotiable instrument. Excluding personal liability by an indorsement "without recourse", he transfers the instrument to B, and B indorses it to C, who indorses it to A. A is not only reinstated in his former rights, but has the rights of an indorsee against B and C.