CMA Foundation · Fundamentals of Business Laws and Business Communication · Negotiable Instruments Act, 1881
According to the Act, to whom is every prior party to a negotiable instrument liable until the instrument is duly satisfied?
Every prior party is liable to a holder in due course. This liability continues until the instrument is duly satisfied, so the holder in due course may proceed against any earlier party on the instrument.
- AA holder in due courseCorrect
- BOnly the immediate payee
- COnly the drawee bank
- DOnly the maker
Explanation
Section 36 provides that every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied. The liability is not limited to the immediate payee, drawee or maker.
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