Month: April 2020

A cheque is a very common form of negotiable instrument. You need a savings bank account or current account in a bank, in order to issue a cheque in your own name or in favor of others, thereby directing the bank to pay the predetermined amount to the individual named in the cheque.

This transaction has to be handled very delicately as it may lead to some serious banking frauds. Read a Banking awareness book to manage your account and safeguard your transactions from frauds and scams.

A cheque is a document which ensures the payment of a particular amount of money on demand to a certain individual or to the bearer of the instrument. It is a printed form which you can use to make payment from your bank account. When you write a cheque you enter the amount of money that you want to send to the person and who is to be paid to, sign and hand it over to the individual you want to make payment to. Your bank then pays the money to that individual (payee) from your account.

It is one of the safest and convenient modes of making payments and is transferred by mere delivery.

One of the benefits of the cheque is that you can transfer a high-value transaction without any hassle which would be very difficult if hard cash was used instead.

The issuer of the cheque has an account (savings or current) with the bank to which it is connected. There are various types of cheque books which depend on the type of account you have.

Cheque refers to a negotiable instrument that contains an unconditional order to the bank to pay a certain sum mentioned in the instrument, from the drawer’s account, to the person to whom it is issued, or to the order of the specified person or the bearer.

Parties to Cheque

Basically, there are three parties to a cheque

• Drawer: The person who draws the cheque, i.e. signs and orders the bank to pay the sum.
• Drawee: The bank on which the cheque is drawn or who is directed to pay the specified sum written on the cheque.
• Payee: The beneficiary, i.e. to whom the amount is to be paid.

Apart from these three, there are two more parties to a cheque:

Endorser: When a party transfers his right to take the payment to another party, he/she is called endorser.

Endorsee: The party in whose favour, the right is transferred, is called endorsee.

Sometimes, the drawer and payee can be the same person, when the drawer writes a self-cheque.

Some of the important details which should be present in a cheque are as follows:

• A cheque should be dated.
• A cheque should mention the amount of money in figures and words.
• A cheque must be signed by the person (Drawer) issuing the cheque
• A cheque must be drawn upon a specified bank (Drawee).
• A cheque must have the name of the recipient (Payee) of the cheque.

Some of the most common types of cheque are listed here.

1. Bearer Cheque

The first among the types of cheques is the bearer cheque. This cheque is payable to the bearer of the check or whose name the cheque carries in the column meant for the name of the drawee. Ideally, this cheque has “or bearer” printed at the end of the dotted lines, which is meant to have the name of the drawee. This cheque can be presented over the counter of the drawee bank and is payable to the one presenting it. It is a transferable instrument and thus can be passed on to another by mere delivery, there is no need to endorse this type of cheque.

2. Order Cheque

In this cheque, the printed word “bearer” is canceled thereby making it payable only to the person whose name is written in the place of drawee. Once “bearer” has been canceled on the cheque, it is automatically understood that this is an order cheque and the bank can only complete the transaction once they have identified, to their satisfaction, the bearer of the cheque to be the same person, as named in it.

3. Crossed Cheque

In a crossed cheque, the drawer makes two parallel transverse lines at the top left corner of the cheque with or without writing “a/c payee”. This makes sure that no matter who presents the cheque to the drawer bank, the transaction is made into the account of the person named in the cheque only. The advantage of cross cheque is that it reduces the risk of money being given to an unauthorized person because this type of cheque can only be cashed by the drawee’s bank.

4. Open Cheque

Also known sometimes as an uncrossed cheque. Any cheque that is not crossed comes under open cheque category. This cheque can be presented to the drawer’s bank and is payable to the person presenting it. The drawee of this cheque can also transfer it to another person by writing their name on the cheque and thereby making them the drawee. To make the cheque open, the word OPEN should not be crossed off, and the person issuing the cheque must ensure his/her signatures on both the front and the back of the cheque. Otherwise, the payee may be denied the payment by the bank. The payee is also expected to sign at the back of the cheque while receiving the amount.

5. Post- Dated Cheque

A cheque bearing a later date than the one on which it is actually issued, is called as a post-dated cheque. This cheque maybe presented to the drawee bank at any time after its issuance, but the money will not be transferred from the account of the payer until the date mentioned on the cheque. The payee can also present the cheque after the date mentioned on the cheque too. It will still be valid, and the money will be transferred to the payee’s account.

6. Stale Cheque

As the name suggests, a stale cheque is one which is past its validity period and can no longer be encashed. Initially, this period was six months from the date of issue. Now, this period has been reduced to three months.

7. Travelers’ Cheque

These may be equated with a universally accepted currency. A travelers’ cheque is available almost everywhere and comes in various denominations. This is an instrument issued by the bank itself to make payments from one place to another. There is no expiry date of a travelers’ cheque and thus it can be used during your next travel as well, or you have the option to encash it once you land back in India.

8. Self Cheque

The drawer usually issues a self-cheque to his or her self. The name column of the drawee has the word “self” written in it. A self-cheque is drawn when the drawer wishes to withdraw money from the bank in cash for his use. This cheque can only be encashed in the account holder’s or the drawer’s bank. This cheque must be used carefully because if it is lost, another person may easily get it encashed by visiting the drawer’s bank.

9. Bankers Cheque

A banker’s cheque, as is self-explanatory here, is a cheque issued by the bank on behalf of the account holder in order to make payment of a specified sum, by order, to another person within the same city. It is valid only for three months from the date of issue, but if needed, can be re-validated upon fulfilling certain legal obligations.

The written notice taken by a grand jury of any offence, from their own knowledge or observation, without any bill of indictment laid before them at the suit of the government upon such presentment, when ‘proper, the officer emloyed to prosecute, afterwards frames a till of indictment, which is then sent to the grand jury, and they find it to be a true bill. In an extended sense presentments include not only what is properly so called, but also inquisitions of office, and indictments found by a grand jury.

The difference between a presentment and an inquisition, is this, that the former is found by a grand jury authorized to inquire of offences generally, whereas the latter is an accusation found by a jury specially returned to inquire concerning the particular offence. The writing which contains the accusation so presented by a grand jury, is also called a presentment.

In general the presentment for payment should be made to the maker of a note, or the drawee of a bill for acceptance, or to the acceptor, for payment; but a presentment made at a particular place, when pavable there, is in general sufficient. A personal demand on the drawee or acceptor is not necessary; a demand at his usual place of residence of his wife or other agent is sufficient.

When a bill or note is made payable at a particular place, a presentment, as we have seen, may be made there; but when the acceptance is general, it must be presented at the house or place of business of the acceptor.

In treating of the time for presentment, it must be considered with reference to:

• A presentment for acceptance
• One for payment

When the bill is payable at sight, or after sight, the presentment must be made in reasonable time; and what this reasonable time is depends upon the circumstances of each case. The presentment of a note or bill for payment ought to be made on the day it becomes due, and notice of non-payment given, otherwise the holder will lose the security of the drawer and endorsers of a bill and the endorsers of a promissory note, and in case the note or bill be payable at a particular place and the money lodged there for its payment, the holder would probably have no recourse against the maker or acceptor, if he did not present them on the day, and the money should be lost.

The excuses for not making a presentment are general or applicable to all persons, who are endorsers; or they are special and applicable to the particular’ endorser only. Among the former are:

• Inevitable accident or overwhelming calamity
• The prevalence of a malignant disease, by which the ordinary operations of business are suspended
• The breaking out of war between the country of the maker and that of the holder
• The occupation of the country where the note is payable or where the parties live, by a public enemy, which suspends commercial operations and intercourse
• The obstruction of the ordinary negotiations of trade by the vi’s maj or
• Positive interdictions and public regulations of the state which suspend commerce and intercourse
• The utter impracticability of finding the maker, or ascertaining his place of residence

Among the latter or special excuses for not making a presentment may be enumerated the following:

• The receiving the note by the holder from the payee, or other antecedent party, too late to make a due presentment; this will be an excuse as to such party
• The note being an accommodation note of the maker for the benefit of the endorser
• A special agreement by which the endorser waives the presentment
• The receiving security or money by an endorser to secure himself from loss, or to pay the note at maturity. In this case, when the indemnity or money is a full security for the amount of the note or bill, no presentment is requisite
• The receiving the note by the holder from the endorser, as a collateral security for another debt

A want of presentment may be waived by the party to be affected, after a full knowledge of the fact.

Presentment for Acceptance

A bill of exchange is a negotiable instrument in writing containing an unconditional order, directing a certain person to pay a certain amount only to or to the order of a certain person or to the bearer. The drawer is the person who draws the bill and presents it to the drawee for acceptance. Out of all the negotiable instruments, only bills of exchange require presentment for acceptance.

All kinds of bills of exchange do not require presentment for acceptance. Bills payable on demand or on a fixed date do not require this. However, the following bills require presentment for acceptance in the absence of which the parties to it will not be liable on it:

• Bill payable after sight in order to fix the maturity of the bills.
• A bill that consists of an express stipulation that presentment for acceptance is necessary before presentment for payment.

As per section 15, the presentment for acceptance shall be made to the drawee or his duly authorized agent, in case of drawee’s death to his legal representative and in case of his insolvency to his official receiver or assigner.

We shall present the bill to the following persons:

• Drawee or his duly authorized agent.
• In case of more than one drawee, to all the drawees.
• In the case of drawee’s death, to his legal representative.
• Where the drawee becomes insolvent, to his official receiver.
• When the original drawee refuses to accept the bill, to a drawee in case of need.
• The acceptor for honour.

The presentment for acceptance shall be done before maturity, within a reasonable time after it is drawn, on a business day during business hours at a business place or residence of the drawee.

The following are the rights of a collecting banker:

1. The banker should present the cheque to the paying banker for encashment within a reasonable time. What is reasonable time depends upon the facts of each case. As per the prevailing practice, the collecting banker should present the cheques received for collection from customers at least by the following or next day after he receives it. Any undue delay in collection would render the banker liable to the customer for any loss the latter may suffer on account of the delay.
2. If the cheque presented in clearing is realized, then the proceeds of the realized cheque should be credited to the account of the customer without any delay.
3. In case the cheque sent for collection is dishonoured by the drawee bank, the collecting bank should return the cheque to the customer within a reasonable time so as to enable the customer to recover the amount of the cheque from parties liable thereto. If he fails to send the notice of dishonour of the cheque to the customer within a reasonable time and the customer suffers a loss as a consequence of the omission to send the notice, the collecting banker becomes liable to compensate the customer.

The Following are the rights and duties of a collecting banker.

• Cheque crossed generally be paid only to banker
• A cheque crossed specially should be paid only to through banker
• Second special crossing in favour of the banker
• A banker cannot ignore the crossing

Liabilities of Paying Banker

1. Proper Form

A banker should see whether the cheque is in the proper form. That means the cheque should be in the manner prescribed under the provisions of the commercial code. It should not contain any condition.

2. Open or Crossed Cheque

The most important precaution that a banker should take is about crossed cheques. A banker has to verify whether the cheque is open or crossed. He should not pay cash across the counter in respect of crossed cheques. If the cheque is a crossed one, he should see whether it is a general crossing or special crossing. If it is a general crossing, the holder must be asked to present the cheque through some banker. It should be paid to a banker. If the cheque bears a special crossing, the banker should pay only the bank whose name is mentioned in then crossing. If it is an open cheque, a banker can pay cash to the payee or the holder across the counter. If the banker pays against the instructions as indicated above, he is liable to pay the amount to the true owner for any loss sustained. Further, a banker loses statutory protection in case of forged endorsement.

For example, Madras Bank Ltd. Vs South India Match Factory Ltd., a cheque was issued by a purchaser in favour of the official liquidator of a company towards the purchase price of certain properties. The bank paid the amount of the crossed cheque to the liquidator across the counter. The liquidator mis-appropriated the amount. The court held that the banker committed breach of statutory duty and was negligent in paying direct to the liquidator over the counter and hence, was not entitled to legal protection.

If it is a ‘Not Negotiable’ crossing, the paying banker has to verify the genuineness of all the endorsements. If it is an ‘Account Payee’ crossing, the banker can credit the account of the payee named in the cheque and not that of any other person.

3. Place of Presentment of Cheque

A banker can honour the cheques provided it is presented with that branch of the bank where the drawer has an account. If the cheque is presented at another branch of the same bank, it should not be honoured unless special arrangements are made by the customer in advance. The reasons are:

• A banker undertakes to pay cheques only at the branch where the account is kept.
• The specimen signature of the customer will be with the office of the bank at which he has an account.
• It is not possible for other branches to know that the customer has adequate balance to meet the cheque.

Bank of India Vs Official Liquidator: In this case, it was held that if customer has an account in a bank which has several branches, the branches at which he has no account are justified in refusing to honour his cheques.

4. Date of the Cheque

The paying banker has to see the date of the cheque. It must be properly dated. It should not be either a post-dated cheque or a stale-cheque. If a cheque carries a future date, it becomes a post-dated cheque. If the cheque is presented on the date mentioned in the cheque, the banker need not have any objection to honour it. If the banker honours a cheque before the date mentioned in the cheque, he loses statutory protection. If the drawer dies or becomes insolvent or countermands payment before the date of the cheque, he will lose the amount. The undated cheques are usually not honoured.

A stale cheque is one which has been in circulation for an unreasonably long period.

The custom of bankers in this respect varies. Generally, a cheque is considered stale when it has been in circulation for more than six months. Banker does not honour such cheques. However, banker may get confirmation from the drawer and honour cheques which are in circulation for a long time. So, verification of date is very important.

5. Mutilated Cheque

The banker should be careful when mutilated cheques are presented for payment. A cheque is said to be mutilated when it has been cut or torn, or when a part of it is missing. Mutilation may be either accidental or intentional.

If it is accidental, the banker should get the drawer’s confirmation before honouring it. If it is intentional, he should refuse payment. The cheque is to be returned with a remark ‘Mutilated cheque’ or ‘Mutilation Requires Confirmation’. In Scholey Vs Ramsbottom, the banker was held liable for wrong payment of a cheque which was dirty and bore visible marks of mutilation.”

6. Words and Figures

The amount of the cheque should be expressed in words, or in words and figures, which should agree with each other. When the amount in words and figures differ, the banker should refuse payment. However, there is difference between the amount in words and figures; the amount in words is the amount payable. If the banker returns the cheque, he should make a remark ‘amount in words and figures differ.

7. Alterations and Overwritings

The banker should see whether there is any alteration or over-writing on the cheque. If there is any alteration, it should be confirmed by the drawer by putting his full signature. The banker should not pay a cheque containing material alteration without confirmation by the drawer. The banker is expected to exercise reasonable care for the detection of such alterations.

Otherwise, he has to take risk. Material alterations make a cheque void.

8. Proper Endorsements

Cheques must be properly endorsed. In the case of bearer cheque, endorsement is not necessary legally. In the case of an order cheque, endorsement is necessary. A bearer cheque always remains a bearer cheque. The paying banker should examine all the endorsements on the cheque before making payment. They must be regular. But it is not the duty of the paying banker to verify the genuineness of the endorsements, unless the cheque bears ‘Not-Negotiable’ crossing. He is not expected to know the signatures of all payees. So he gets statutory protection in case of forged endorsements. In India, even in the case of bearer cheques, bankers insist on endorsement though it is not required.

9. Sufficiency of Funds

The banker should see whether the credit balance in the customer’s account is sufficient to pay the cheque or not. If there is an overdraft agreement, he should see that the limit is not exceeded. The banker should not make part-payment of the cheque. He should pay either full amount or refuse payment. In case of insufficiency of funds, the banker should return the cheque with the remark ‘No Funds’ or ‘Not Sufficient Funds’.

10. Verification of Drawer’s Signature

The banker takes specimen signatures of his customers’ at the time of opening the account. He should compare the drawer’s signature on the cheque with the specimen signature of the customer. He should carefully examine the signature to find out whether the drawer’s signature is forged or not. If there is any difference or doubt, he should not honour the cheque. He should get the confirmation of the drawer. If there is forgery and there is negligence on the part of the banker to detect the same, there is no protection to the banker.

Liabilities of Collecting Banker

1. Due Care and Diligence in the Collection of Cheques

The collecting banker is bound to show due care and diligence in the collection of cheques presented to him.

In case a cheque is entrusted with the banker for collection, he is expected to show it to the drawee banker within a reasonable time. A cheque is not presented for payment within a reasonable time of its issue, and the drawer or person in whose account it is drawn had the right, at the time when presentment ought to have been made, as between himself and the banker, to have the cheque paid and suffers actual damage, through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of the banker to a large amount than he would have been if such cheque had been paid.

In case a collecting banker does not present the cheque for collection through proper channel within a reasonable time, the customer may suffer loss. In case the collecting banker and the paying banker are in the same bank or where the collecting branch is also the drawee branch, in such a case the collecting banker should present the cheque by the next day. In case the cheque is drawn on a bank in another place, it should be presented on the day after receipt.

2. Serving Notice of Dishonor

When the cheque is dishonored, the collecting banker is bound to give notice of the same to his customer within a reasonable time. It may be noted here, when a cheque is returned for confirmation of endorsement, notice must be sent to his customer. If he fails to give such a notice, the collecting banker will be liable to the customer for any loss that the customer may have suffered on account of such failure.

Whereas a cheque is returned by the drawee banker for confirmation of endorsement, it is not called dishonor. But in such a case, notice must be given to the customer. In the absence of such a notice, if the cheque is returned for the second time and the customer suffers a loss, the collecting banker will be liable for the loss.

3. Agent for Collection

In case a cheque is drawn on a place where the banker is not a member of the ‘clearing-house’, he may employ another banker who is a member of the clearing-house for the purpose of collecting the cheque. In such a case the banker becomes a substituted agent.  An agent, holding an express or implied authority to name another person to act in the business of the agency has accordingly named another person, such a person is a substituted agent. Such an agent shall be taken as the agent of a principal for such part of the work as is entrusted to him.

4. Remittance of Proceeds to the Customer

In case a collecting banker has realized the cheque, he should pay the proceeds to the customer as per his (customer’s) direction. Generally, the amount is credited to the account of the customer on the customer’s request in writing; the proceeds may be remitted to him by a demand draft. In such circumstances, if the customer gives instructions to his banker, the draft may be forwarded. By doing so, the relationship between principal and agent comes to an end and the new relationship between debtor and creditor will begin.

5. Collection of Bills of Exchange

There is no legal obligation for a banker to collect the bills of exchange for its customer. But, generally, bank gives such facility to its customers. In collection of bills, a banker should examine the title of the depositor as the statutory protection.

Thus, the collecting banker must examine very carefully the title of his customer towards the bill. In case a new customer comes, the banker should extend this facility to him with a trusted reference.

From the above discussion, there is no doubt to say that the banker is acting as a mere agent for collection and not in the capacity of a banker. If the customer allows his banker to use the collecting money for its own purpose at present and to repay an equivalent amount on a fixed date in future the contract between the banker and the customer will come to an end.

An amortized loan is a loan with scheduled periodic payments that are applied to both principal and interest. An amortized loan payment first pays off the relevant interest expense for the period, after which the remainder of the payment reduces the principal. Common amortized loans include auto loans, home loans, and personal loans from a bank for small projects or debt consolidation.

How an Amortized Loan Works?

Interest is calculated based on the most recent ending balance of the loan and the interest amount owed decreases as payments are made. This is because any payment in excess of the interest amount reduces the principal, which in turn, reduces the balance on which the interest is calculated. As the interest portion of an amortization loan decreases, the principal portion of the payment increases. Therefore, interest and principal have an inverse relationship within the payments over the life of the amortized loan.

An amortized loan is the result of a series of calculations. First, the current balance of the loan is multiplied by the interest rate attributable to the current period to find the interest due for the period. (Annual interest rates may be divided by 12 to find a monthly rate.) Subtracting the interest due for the period from the total monthly payment results in the dollar amount of principal paid in the period.

The amount of principal paid in the period is applied to the outstanding balance of the loan. Therefore, the current balance of the loan minus the amount of principal paid in the period results in the new outstanding balance of the loan. This new outstanding balance is used to calculate the interest for the next period.

Amortized Loans vs. Balloon Loans vs. Revolving Debt and Credit Cards

Here’s how you can tell these three loan types apart. When you’re taking out a loan, be sure you’re getting the kind you need.

• Amortized loans are generally paid off over an extended period of time by equal amounts for each payment period. However, there is always the option to pay more and thus further reduce the principal owed.
• Balloon loans, on the other hand, typically feature a relatively short term and only a portion of the loan’s principal balance is amortized over that term. At the end of the term, the remaining balance is due as a final repayment, which is large, generally, at least double the amount of previous payments.
• Revolving debt and credit cards don’t have the same features as amortized loans since they don’t have set payment amounts or a fixed loan amount.

Points

• An amortized loan is a loan with scheduled periodic payments that are applied to both principal and interest.
• An amortized loan payment first pays off the interest expense for the period while the remaining amount reduces the principal.
• As the interest portion of the payments for an amortization loan decreases, the principal portion increases.

Right of Parties

• Conduct of business
• Can express opinion
• Access, inseption, copy
• Equality of Profits
• Interest on capital
• Interest on advance
• To get indemnity
• Partner’s authority
• Power in an emergency
• Reconstitution
• Dissolution

Liability of Parties

Negotiable Instrument refers to a promissory note, bill of exchange or cheque payable either to order or to bearer.  It is a piece of paper which carries some value and is transferable from one person to another by mere delivery or by endorsement and delivery. Here, we will discuss the liability of parties to negotiable instrument act.

The provisions relating to the liability of parties to negotiable instruments are under section 30 to 32 and 35 to 42 of the Negotiable Instrument Act, 1881.

The Liability of parties is as follows:

1. Liability of Drawer (Section 30)

Drawer means a person who signs a cheque or a bill of exchange ordering his or her bank to pay the amount to the payee.

In case of dishonour of cheque or bill of exchange by the drawee or the acceptor, the drawer of such cheque or bill of exchange needs to compensate the holder such amount. But, the drawer needs to receive due notice of dishonour.

So, the nature of the drawer’s liability on drawing a bill is:

• On due presentation:- It should be accepted and paid accordingly.
• In the case of dishonour:- Drawer needs to compensate the holder such amount, only when he receives a notice of dishonour by the drawee.

2. Liability of the Drawee of Cheque (Section 31)

 The person who draws a cheque i.e drawer having sufficient funds of the drawer in his hands properly applicable to the payment of such cheque must pay the cheque when duly required to do so and, or in default of such payment, he shall compensate the drawer for any loss or damage caused by such default.

The drawee of a cheque will always be a banker. As a cheque is a bill of exchange, drawn on a specified banker by the drawer, the banker is bound to pay the cheque of the drawer, i.e., the customer. For the following conditions are need to be satisfied:

• Sufficient amount of funds to the credit of customer’s account should be there with the banker.
• Such funds are required to be properly applied against the payment of such cheque, e.g., the funds are not under any kind of lien etc.
• The cheque is duly required to be paid, during banking hours and on or after the date on which it is made payable.

If the banker unjustifiably refuses to honour the cheque of its customer, it shall be liable for damages.

3. Liability of Acceptor of Bill and Maker of Note (Section 32)

 As per section 32 of negotiable instrument act, in the absence of a contract to the contrary, the maker of a promissory note and the acceptor before the maturity of a bill of exchange are under the liability to pay the amount thereof at maturity.

They need to pay the amount according to the apparent tenor of the note or acceptance respectively.  The acceptor of a bill of exchange at or after maturity is liable to pay the amount thereof to the holder on demand.

The liability of the acceptor of a bill or the maker of a note is absolute and unconditional but is subject to a contract to the contrary and may be excluded or modified by a collateral agreement.

4. Liability of Endorser (Section 35)

 An endorser is the one who endorses and delivers a negotiable instrument before maturity. Every endorser has a liability to the parties that are subsequent to him.

Also, he is bound thereby to every subsequent holder in case of dishonour of the instrument by the drawee, acceptor or maker, to compensate such holder of any loss or damage caused to him by such dishonour. However, he is to compensate only after the fulfilment of the following conditions:

• There is no contract to the contrary
• The Endorser has not expressly excluded, limited or made conditional his own liability
• And, such endorser shall receive due notice of dishonour

5. Liability of Prior Parties (Section 36)

 Until the instrument is duly satisfied, every prior party to a negotiable instrument has a liability towards the holder in due course. The prior parties include the maker or drawer, the acceptor and all the intervening endorsers. Also, there liability to a holder in due course is joint and several. In the case of dishonour, the holder in due course may declare any or all prior parties liable for the amount.

6. Liability Inter-se

 Every liable party has a different footing or stand with respect to the nature of liability of each one of them.

7. Liability of Acceptor when Endorsement is Forged (Section 41)

 An acceptor of a bill of exchange who had already endorsed the bill is not relieved from liability even if such endorsement is forged. This is so even if he knew or had reason to believe that the endorsement was forged when he accepted the bill.

8. Acceptor’s Liability when Bill is drawn in a Fictitious Name

An acceptor of a bill of exchange who draws a bill in a fictitious name, payable to the drawer’s order will be liable to pay any holder in due course. He or she will not be relieved from such liability by reason that such name is fictitious.