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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

A bill of exchange is drawn and indorsed in India but accepted payable in France and is dishonoured. What law determines what constitutes dishonour and what notice of dishonour is sufficient?

The law of France applies, because Section 135 provides that when an instrument is payable at a place different from where it was made or indorsed, the law of the place of payment decides what amounts to dishonour and what notice is sufficient.

  1. AThe law of India, where it was drawn
  2. BThe law of the place where the indorsee lives
  3. CThe law of France, where it is made payableCorrect
  4. DThe law chosen by the drawer after dishonour

Explanation

Section 135 states that where an instrument is payable in a different place from where it is made or indorsed, the law of the place of payment determines dishonour and the sufficiency of notice. The payment place here is France, so French law applies. Indian rules on notice are not required.

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