Presentment, Acceptance and Payment

In one line

Presentment is showing the instrument to the person who must act on it, acceptance is the drawee agreeing to pay a bill, and payment in due course discharges everybody.

In the wording a student can write in an exam: a bill of exchange payable after sight must be presented for acceptance under section 61 of the Negotiable Instruments Act, 1881; every negotiable instrument must be presented for payment to the maker, acceptor or drawee under section 64, and in default the parties liable to the holder are not liable to him; sections 65 to 77 fix the hours, place, manner and excuses of presentment; and section 78 provides that payment must be made to the holder, while section 82 discharges the instrument by payment in due course.

Why presentment matters at all

Because the secondary parties are only conditionally liable. Chapter 410 established that the maker of a note and the acceptor of a bill are liable absolutely, while the drawer and indorsers are liable on dishonour and due notice.

Dishonour presupposes presentment. If the holder never presents the instrument, there is no dishonour, so the condition on which the drawer's and indorsers' liability depends never occurs, and section 64 says exactly that: in default of presentment the other parties are not liable to the holder.

So presentment is the holder's own burden. He is not being asked to do the debtor a favour; he is preserving his rights against everybody except the primary party.

And that explains the elaborate machinery of excuses. Because failure to present is fatal, the Act sets out at length the circumstances in which presentment is dispensed with, so that a holder who could not present is not punished for it.

Presentment for acceptance

Only a bill of exchange needs acceptance, and only some bills need presentment for it.

Section 61. A bill of exchange payable after sight must, if no time or place is specified for presentment, be presented to the drawee thereof for acceptance, if he can, after reasonable search, be found, by a person entitled to demand acceptance, within a reasonable time after it is drawn, and in business hours on a business day. In default of such presentment, no party thereto is liable thereon to the person making the default.

The section also deals with the case of several drawees who are not partners, requiring presentment to them all, and with a drawee who is a fictitious person or who cannot after reasonable search be found.

Section 62: presentment of a promissory note payable after sight. Such a note must be presented to the maker thereof for sight, if he can after reasonable search be found, by a person entitled to demand payment, and in default of such presentment no party thereto is liable to the person making the default.