NI Act_Practicle Problems_26

State whether the following alterations are material or not:

a. The holder of a bill inserts the words 'or order'.

b. A bill was dated 1989 instead of 1999 & subsequently the agent of the drawer corrected the mistake.

c. A cheque payable to bearer was converted into a cheque payable to order.

d. Crossing a cheque.

NI Act_Practicle Problems_25

State whether the following alterations are material or not:

a. A bill for Rs.1,000 is changed into a bill for Rs.2,000.

b. A bill is accepted payable at Dena Bank is changed to a bill accepted pay­able at Canara Bank.

c. A bill payable to P is changed into a bill payable to P and Q.

d. A bill was endorsed in blank and handed over to Y, who endorsed as 'Pay to Z or order’.

NI Act_Practicle Problems_24

A bill payable at Delhi is changed to bill payable at Bombay. Is it material alteration ?

NI Act_Practicle Problems_23

A bill payable 3 months after date is changed to a bill payable 3 months after sight. Is it material alteration ?

NI Act_Practicle Problems_22

A bill dated 1st April 1999 is changed to a bill dated 1st May 1999. Is it material alteration ?

Contract Act_Practical Problems_57

A bank sanctions an overdraft limit against the security of a continuing guarantee. The surety dies. Can the bank proceed against the heirs of the surety under the guarantee and, if so, to what extent ?

The death of the surety operates, in the absence of a contract to the contrary, as a revocation of a continuing guarantee as regards future transactions. It may, however, be noted that the estate of the surety shall be liable for all transactions entered into between the creditor and the principle debtor prior to the death of the surety, unless there was a contract to the contrary. However, his estate shall not be liable for the transactions entered into after his death, even if the creditor has no notice of the death.

Thus, in the given problem, since there is nothing against attachment of surety's properties after his death, the heirs of the surety shall be liable for the debit balance in the overdraft account but this liability shall be limited to the higher of the following two:

1. The amount of debit balance in the overdraft account as on the date of surety's death;
and

2. The value of the surety's estate acquired by the heirs.

Contract Act_Practical Problems_56

A guaranteed the honesty of a servant in the employment of B. The servant was guilty of dishonesty in the course of the service, but B continued to employ him and did not inform A of what had occurred. Subsequently, the servant committed further acts of dishonesty. B requires A to make good the loss. Discuss the liability of A.

In the given case, A cannot be held liable because of change in circumstances not brought to his notice by the creditor having knowledge of the same. Under such circumstances. Section 139 of the Indian Contract Act, 1872 becomes operative. It provides that if the creditor does any act which is inconsistent with the right of surety, or omits to do any act which his duty to the surety requires him to do, and the eventual remedy of surety himself against the principal debtor is thereby impaired, the surety is discharged. Thus, in the present case the omission of the creditor to inform A of servant's dishonesty and his conduct of continuing to employ him, shall discharge the surety A.