Negotiable instruments act 1881
Querist : Anonymous
plzz give an example...:(
When a bill of exchange is drawn, accepted, or endorsed without consideration, it is called an “accommodation bill”.
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Example : Ram is need of Rs.50,000/-. He asked his friend Mohan for borrowing the amount.
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Mohan may not be in a position to lend but agrees that Ram may draw a bill on him, which he would accept.
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If Ram's credit is good, he would get the bill discounted with his banker.
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On the due date, Ram would pay Rs.50,000/- to Mohan, and such amount is deposited by Mohan with Ram's Bank against the discounted bill .
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The person who signs, accept or endorses a bill without receiving any consideration is said to have lent his name to an ‘Accommodation Bill’ so here Mohan is Accommodating Party.
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The person who so draws bills, in this case Ram is, “Accommodation Party”.
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Querist : Anonymous
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