115 Applies only to indorser concerned -a) indorser must be aware of such fact But knowledge re: 116

dishonored by NONACCEPTANCE immediate right of recourse against all secondary parties accrues to the holder no presentment for payment is necessary o since dishonor by nonpayment is to be expected that instrument has been dishonored maker is insolvent does not dispense with notice

instrument accepted AFTER dishonored by nonacceptance necessary: holder to present the instrument for payment upon maturity o in case of nonpayment holder must give notice to all secondary parties otherwise, will be discharged

117 Dishonored by NONPAYMENT no holders subsequent can be holder in due course o bec date of maturity appears on the date thereon o holder knows of such dishonor from fact that it is overdue but holder may present it for acceptance before maturity o drawee may refuse without having to write anything on the instrument failure of previous holder to give a notice of dishonor by nonacceptance cannot prejudice holder in due course o who may still present the instruemtn to the drawee for acceptance and notify the drawer and indorsers if acceptance is refused

118 1) foreign bills of exchange - protest necessary for dishonor by nonacceptance or nonpayment - if not protested, drawer and indorsers discharged

2) other negotiable instrument - protest for inland bills of exchange, checks, PNs is optional - except in cases i. 158 Protest before maturity where acceptor insolvent. Where the acceptor has been adjudged a - bankrupt or an - insolvent or has - made an assignment for the benefit of creditors before the bill matures, the holder may cause the bill to be protested for - better security against the drawer and indorsers ii. 161 When bill may be accepted for honor. When a bill of exchange has been - protested for dishonor by non-acceptance or protested for better security and - is not overdue, any person - not being a party already liable thereon may, - with the consent of the holder, intervene and accept the bill supra protest - for the honor of any party liable thereon or - for the honor of the person for whose account the bill is drawn. The acceptance for honor may be for - part only of the sum for which the bill is drawn; and where there has been an acceptance for honor for one party, - there may be a further acceptance - by a different person - for the honor of another party iii. 171 Who may make payment for honor. Where a bill has been protested for non-payment, any person may - intervene and pay it supraprotest - for the honor of any person liable thereon or - for the honor of the person for whose account it was drawn Formal protest of a promissory note by a notary public is not essential to hold an indorser Essential - presentment - demand - at the time and place provided in the instrument - notice to indorser of such presentment, demand, nonpayment Summary of rules as to notice of dishonor 1) notice of dishonor not necessary for parties primarily liable a) necessary to hold secondary parties liable

2) Notice of dishonor not necessary to charge persons 2ndary liable a) Notice is waived (109) b) Protest is waived (111) c) Dispensed with (112) d) As to drawer (114) e) As to indorser (115) f) Due notice of dishonor by nonaccpetance has been given under 116 g) Holder in due course, without notice of dishonore by acceptance, subsequent to the omission to give notice under 117 119 Discharge of an instrument - A release of all the parties Whether primary or secondary - From the obligations arising thereunder - Renders the instrument without force and effect - It can no longer be negotiated Discharge - Refers to the instruments itself - And to the parties to it Discharge of instrument (and of primary parties)- 119
a) By payment in due course by or on behalf of the principal debtor; (b) By payment in due course by the party accommodated, where the instrument is made or accepted for his accommodation; (c) By the intentional cancellation thereof by the holder; (d) By any other act which will discharge a simple contract for the payment of money; (e) When the principal debtor becomes the holder of the instrument at or after maturity in his own right.

Discharge of secondary parties (120)

(a) By any act which discharges the instrument; (b) By the intentional cancellation of his signature

by the holder;

(c) By the discharge of a prior party; (d) By a valid tender or payment made by a prior party; (e) By a release of the principal debtor unless the holder's right of recourse against the party secondarily liable is expressly reserved; (f) By any agreement binding upon the holder o to extend the time of payment or o to postpone the holder's right to enforce the instrument unless made with the assent of the party secondarily liable or unless the right of recourse against such party is expressly reserved.

119 is exclusive 1) payment by principal debtor - by or on behalf of the principal debtor - at or after its maturity - to the holder thereof - in good faith and without notice that the holders title is defective principal debtor (119 a,e, 120e, 122) - person ultimately bound to pay the debt - not necessarily the person primarily liable on the instrument check - holder not bound to accept - not legal tender 2) payment by accommodated party - accommodated party actual principal debtor - whether he appears as a party to the instrument or not 3) Intentional cancellation - To effect discharge of instrument; cancellation must - Be intentionally done - By the holder thereof - May be done by writing the word cancelled paid on the face of instrument - Or be torn up, burned, mutilated, destroyed - Presumption: cancellation is INTENTIONAL 4) Any act which discharges a contract - General for payment of money - 1231 of CC- obligations are extinguished - Payment or performance - Loss of the thing due

- Condonation or remission of the debts - Confusion or merger of the rights of creditor/debtor - Compensation - Novation - Various causes of discharging a simple contract such as payment, condonationwill discharge instrument as between IMMEDIATE parties - Will not in the hands of a holder in due course 5) Reacquisition by principal debtor in his own right - Reacquisition must be: - By the principal debtor - In his own right - At or after the date of maturity - Merger in his person of creditor and debtor - in his own right not in a repsresentative capacity - at or after otherwise no discharge bec debtor can renegotiate 120 - Applies only to 2ndary liable arties - Not secondary liable parties - Accommodation co-maker - Accommodation acceptor - Discharge by secondary party does not effect discharge of instrument - Intentional cancellation - Discharges secondary partys liability - No consideration is necessary to support such discharge - Subject to limitation: indorsement is not necessary to holders title - Discharge of prior party by act of holder - Discharges parties subsequent to the party discharged, Discharge deprives a subsequent party of a right to recourse against the party discharged prior party indorsers as well as principal debtors - Applies only to discharge by act of holder not to discharges by operation of law Not include discharge by bankruptcy Or discharge by statute of limitaitions Or discharge of party for failer of holder to give him notice of dishonor - Valid tender of payment - Act by which one produces and offers to a person holding a claim or demand against him - the amount of money which he considers and admits to be due - in satisfaction of such claim or demand - without any stipulation or condition