NI Act 40Chapter III · Parties to Notes, Bills and Cheques
Section 40 · Discharge of indorser's liability
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Where the holder of a negotiable instrument, without the
consent of the indorser, destroys or impairs the indorser's remedy against a prior party, the indorser is
discharged from liability to the holder to the same extent as if the instrument had been paid at maturity.
Illustration
A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:--
First indorsement, "B".
Second indorsement, "Peter Williams".
Third indorsement, "Wright & Co".
Fourth indorsement. "John Rozario".
This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.
Illustration
A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:--
First indorsement, "B".
Second indorsement, "Peter Williams".
Third indorsement, "Wright & Co".
Fourth indorsement. "John Rozario".
This bill A puts in suit against John Rozario and strikes out, without John Rozario's consent, the indorsements by Peter Williams and Wright & Co. A is not entitled to recover anything from John Rozario.
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