Define Accommodation Party, Banker, Bearer, Material Alteration, Notary Public, Inland Instrument, Foreign Instrument

by • 06/01/2013 • GeneralComments (0)480

Q.2 Define the following terms.

1. Accommodation Party

2. Banker

3. Bearer

4. Material Alteration

5. Notary Public

6. Inland Instrument

7. Foreign Instrument



“Accommodation party means a person who has signed a negotiable instrument as maker,

Drawer, acceptor or endorser without receiving the value thereof and for the purpose of lending his name to some other person”. Sec 3(a)


An accommodation party is one who accommodates another. He may be the maker, drawer, acceptor, or the endorser f the instrument that has not received the value of the instrument, but has done such act of issuance, acceptance or endorsement for the purpose of lending his name to some other person.



A has need of money. He draws a bill of exchange to his friend B. B accepts this bill in order to accommodate A. A gets it discounted from bank and fulfill his needs. Here B will be accommodation party.



“Banker means a person transacting, the business of accepting, for the purpose of lending or investment. Of deposits of money from the public, repayable on demand or other wise and includes any post office saving Bank”. Sec 3(b)


A banker is a person, firm or institution, which trades in money. It receives money from the common people in the shape of deposits and lends it to the needy. The amount deposit into banker can be withdrawn by cheque, draft or any other such order by or by the order or the bearer and it also includes post office saving bank.



“Bearer means a person who by negotiation comes into possession of a negotiable instrument, which is payable to bearer”. Sec 3(c)

A bearer is a person who gets a negotiable instrument by negotiable and is entitled to get the payment of that instrument.



Aslam issues bearer cheque (the payment) of which can be received by any person who presents it into the banks. Now any person who will present this cheque for payment to the bank will be called bearer.



“Material alteration it relation to a prom i5sory note, bill of exchange or cheque includes any alteration of the data, the sum payable, the time of payment, the place of payment and where any such instruction has been accepted generally, the addition of a place of payment without the acceptor’s assent”. Sec 3(d) —


Material alteration means any alteration of data, sum payable the time of payment and the place of payment of promissory note, bill of exchange and cheque. If the instrument has been accepted generally and place of payment has not been mentioned, the addition of a place of payment without the assent of the acceptor will also be material alteration.



“Notary public includes any person appointed by the central Government to perform the function of notary appointed under the notary’s ordinance”.


Notary public is a person appointed by the central government. When the holder of the bill presents the bill for payment to the drawee and if the drawee returns the bill dishonored, it is sent to the notary public for record. The notary public will send to the notary public through is own office. If the bill is again returned dishonored, the notary public will issue a certificate to the holder of the bill, which is, proof will issue a certificate to the holder of the bill, which is proof of this dishonour. The drawer (holder of bill) can take action in the court against drawee of the basis of this certificate.



“A promissory note, bill of exchange or a cheque drawn or made inPakistanpayable in, or drawn upon any person resident, inPakistanshall be deemed to be an inland instrument”. Sec 11.

According to the above definition when all the parties of the negotiable instrument i.e. the drawer and the drawee and the payee are the resident of the country instrument is know as an inland instrument.



A living inMultandraws a bill for Rs. 1000/= on B payable atLahore. It will be an inland instrument.



“Any such instrument not drawn made or made payable like inland instrument, shall be deemed to be a foreign instrument”. Sec 12 –


A foreign instrument is just opposite of the inland instrument. When the drawer and payee is the resident of two or more countries the instrument is said to be a foreign instrument. Foreign bills are necessarily protested if dishonoured by the acceptor.



A living inMultandraws a bill for Rs. WOO/= on B living inLondon. It will be a foreign bill (Instrument)

Above all, christians need to use their time wisely and not overcommit themselves.
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