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Hello sir .
An endorsement containing the words for collection.
Mr a draws the bill in the favour of Mr b which is accepted by mr. a Bank.now Mr b endorsed the bill to Mr c and Mr c endorsed the bill ‘ for collection’ to Mr D. Now Mr.D endorsed the bill ‘ for collection’ to Mr.E .
Now question says who will be potentially liable?
Doubt 1 – ( by potentially liable they mean who will honour the bill or who will pay if bill is dishonoured)
Doubt 2 – options include Mr A, A’s bank, B, C, D, E.
Answer says –
Mr a, a bank , b , c but I think Mr a should only be liable since he is original drawer.
Doubt 3- if drawee accept the bill ( suppose Mr z, not bank as in question as Mr a and Mr a bank are same ) and the drawer is unable to pay then drawee has to honour it?Also doubt 4 – what would be answer of the above question( doubt 2) if endrosment containing the words ‘pledge’.
Hi Garvit,
Once again I would appreciate the reference/source from where you obtained these questions so that I can have a clearer picture.
Kind regards,
Vijay
Thankyou sir .
Kaplan (18-19)
Ch- 5 risk and payment
Test your understanding 20 (pg- 143) JULIO HAS DRAWN UP INTERNATIONAL BILL….actually question only asked for endrosment containing words ‘for collection’ but I also asked for endrosment containing the words ‘value in security’. Since I am not clear with both concept.
Hi Garvit,
So Mr A is the Drawer, Mr A’s Bank is the Drawee (Acceptor), Mr B is the Payee but becomes the 1st endorser. Mr C is an endorsee but becomes 2nd endorser, Mr D is the next endorsee but becomes 3rd endorser when he endorses to Mr E who becomes the final Endorsee/Holder/Bearer.
Your Doubt 1 – Mr E is ultimately owed the money and so potentially liable is not always in the context of the bill being dishonoured its simply asking who is potentially liable to Mr E.
Your doubt 2 – You are incorrect in making the assumption that it is only Mr A. In fact all those who have signed the bill prior to it being given to the Holder/Bearer (Mr E) is potentially liable. Please watch the recorded lecture to reinforce this principle of law.
Your doubt 3- Again you are mistaken in thinking that Mr A and Mr A’s bank are the same, they are not. If as in your example Mr Z is the drawee/Acceptor then yes they instead of Mr A’s bank would assume liability but this would not change the answer. The answer is still that all those who have signed the bill prior to it being handed to the Holder/Bearer (Mr E) become potentially liable. Again if you watch the recorded lecture you will see an excellent example by Mike which illustrates this principle of law.
I hope this clarifies the position.
Kind regards,
Vijay
Thankyou sir for answer.
In book answer states that Mr d would not be liable as they have endorsed the bill for collection only.
Kaplan (18-19)
Ch-5 risk and payment
Test your understanding 20
Julio has drawn up an international bill of exchange in favour of kathleen….
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