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The Negotiable Instruments Act, 1881

( ACT NO. XXVI OF 1881 )

Chapter XVI


Law governing liability of parties to a foreign instrument
134. In the absence of a contract to the contrary and subject to the provisions of section 136, in the case of a foreign promissory note, bill of exchange or cheque,-
(a) the law of the place where the instrument was made or drawn, or accepted or negotiated shall determine-
(i) the capacity of the parties; and
(ii) the validity of the instrument or, as the case may be, of its acceptance or negotiation:
Provided that such instrument shall not be invalid or inadmissible in evidence by reason only that it was not stamped or not sufficiently stamped according to the law of the place where it was made or drawn;
(b) the law of the place where such instrument is payable shall determine,-
(i) the liability of all parties thereto;
(ii) the duties of the holder with respect to presentment for acceptance or payment;
(iii) the date of maturity of the instrument;
(iv) what constitutes dishonour;
(v) the necessity for and sufficiency of a protest or notice of dishonour;
(vi) all questions relating to payment and satisfaction including the currency in which and the rate of exchange at which the instrument is to be paid.
A bill of exchange was drawn by A in California, where the rate of interest is 25 per cent., and accepted by B, payable in Washington, where the rate of interest is 6 per cent. The bill is indorsed in Bangladesh, and is dishonoured. An action on the bill is brought against B in Bangladesh. He is liable to pay Interest at the rate of 6 per cent. only; but, if A is charged as drawer, A is liable to pay interest at the rate of 25 per cent.

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