Contract Act_Practical Problems_55

A decree passed in favour of creditor against the debtor and the surety, stipulates that the decree shall not be executed against the surety, before the creditor has taken all steps to execute it against the debtor. Is the stipulation sustainable?

The stipulation in question that the decree shall not be executed against surety before the creditor has exhausted his remedies against debtor, is against law and, therefore, shall not be sustainable. Section 128 of the Indian Contract Act, 1872 makes the liability of the surety coextensive with that of the principal debtor, unless the

contract provides otherwise. Since no such provision is stated to have been so provided, the liability of the surety arises as soon as principal debtor defaults. Any such provision that the remedies be first exhausted against debtor will tantamount to postponement of surety's liability which shall be against the spirit of the provisions of the Indian Contract Act as stated above.

Hence, the decree passed in favour of creditor with the said stipulation is not valid and the creditor may proceed against the decree of the lower court and get the judgement rectified.

NI Act_Practicle Problems_21

B obtains A's acceptance to a bill by fraud. B indorses it to C who takes it as a holder in due course. C endorses the bill to D who knows the fraud. Can D recover from A?

NI Act_Practicle Problems_20

A cheque is payable to M or order. It is stolen and the thief forges M's signature and presents it to the banker who makes the payment in due course. Can M recover the amount from the banker?

NI Act_Practicle Problems_19

H is the holder in due course of a bill of which A is the acceptor. 0, the drawer of the bill is fictitious. Can A escape from his liability to H?

NI Act_Practicle Problems_18

A draws a cheque in favour of B. A's clerk forges B's endorsement and negotiates the cheque to C, who takes it in good faith and for value. C receives payment on the cheque. Discuss the rights of A and C.

NI Act_Practicle Problems_17

State with reasons whether the following shall amount to material alteration and invalidate the instrument.

a. D, in possession of an inchoate instrument where the amount has not been written on the instrument, writes himself the amount.

b. K, in possession of an uncrossed cheque received from A, write “Payee’s A/C only” on the face of the instrument.

NI Act_Practicle Problems_16

A promissory note did not contain the rate of interest in the space provided for the purpose. The creditor puts in the rate. The debtor contends that it is a material alteration and, therefore, he is not liable to pay. Decide.