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CA Foundation · Business Laws · The Negotiable Instruments Act, 1881

Sunita endorses a bill of exchange to Tarun by writing 'Pay to Tarun without recourse to me' and signing it. The bill is dishonoured by the drawee on maturity. Can Tarun hold Sunita liable as an endorser?

Tarun cannot hold Sunita liable. An endorser can exclude her liability by express words such as 'without recourse', and Sunita used them, so on dishonour the claim lies against the other parties.

  1. AYes, an endorser is always liable and the words have no effect
  2. BYes, but only if notice of dishonour is given within 30 days
  3. CNo, because Sunita has excluded her liability by endorsing sans recourseCorrect
  4. DNo, because endorsement to a named person is not valid

Explanation

An endorser may by express words, such as 'sans recourse', exclude their own liability to subsequent holders. Sunita's words do so, so Tarun cannot hold her liable. Option A ignores this right.

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