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CHAPTER III.

PARTIES TO NOTES, BILLS AND CHEQUES.

26. Every person capable of contracting, according to the law to which he is subject, may bind imself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.

A minor may draw, indorse, deliver and negotiate Minor. such instruments so as to bind all parties except himself.

Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered.

Subject to the provisoes contained in Clauses 2 and 3 of this section, it provides that every one, contractus capax, may enter into liability on a negotiable instrument. As to who are capable of contracting, the general rule is to be found in the Contract Act. By that section however, a reservation is made that the rule shall be subject to any other law, which imposes or creates a disqualification upon parties, as instances of which, the effect of marriage upon women's power of contracting, and the existence of war between two states to which the contracting parties belong, may be mentioned.

Alien Enemies. With reference to these, it is only necessary to mention, that it has long been established, that a contract made with an alien enemy, not residing in the country with the Sovereign's license, is void both at law and in equity.

1 Sec. 11, (App.)

Capacity to missory notes,

make, &c., pro

&c.

Married Women.-Under English law the general rule is, that a married woman is unable to bind herself by a contract, nor can she without express authority from him (except for necessaries), bind her husband; but there are exceptions to the rule, as for instance, where she has separate estate1 either by settlement, or under the Married Woman's Property Act, 1870 (33 and 34, Vict. c. 93) and its amending Act of 1874, (37 and 38 Vict. c. 51).2

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In this country however, it is provided by Sec. 4 of the Indian Succession Act (X of 1865, which came into force on the 1st January 1866), that no person shall by marriage become incapable of doing any act in respect of his or her own property, which he or she could have done if unmarried: but by the married Woman's Property Act 1874 it is provided, the above section shall not apply, and shall be deemed never to have applied, to any marriage one or both of the parties to which, professed at the time of the marriage, the Hindu, Mahomedan, Buddhist, Sikh or Jaina religion, so, where the defendant a married woman, who with her husband were both domiciled in British India, where they had been married after Act X of 1865 came into force, and having property to which under Sec. 4 of the said Act she was absolutely entitled, signed a promissory note in favor of the plaintiff, and at the same time verbally promised to discharge it out of her own property, it was held, that nothwithstanding her husband had been joined with her as a defendant in the suit, and she pleaded coverture, she was liable to pay out of her own property, and that if necessary to reach the property, the Court would make a personal decree against her.4

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Under the Married Woman's Property Act, which however like the Succession Act is not applicable to the classes mentioned in the section of that Act quoted above, a married woman's

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property, is liable to satisfy any obligation arising out of a contract, entered into on the faith, that such obligation would be satisfied out of such property, but declares that a married woman shall not be liable to arrest or imprisonment under a decree obtained on a contract so entered into.1 It has no retrospective effect, and a clause in a marriage settlement, executed before the Act came into force, (24th February 1874), against alienation or anticipation, is not affected by the act, or a contract entered into before that time, but in the same case the Court expressed an opinion, that if the contract had been made after the passing of the Act, such a clause would not affect its application. The Act also, provides that the earnings of a married woman shall be deemed her separate property.

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A married woman who is a minor, would not however, be competent to enter into such a contract.*

Lunacy and Drunkenness.-These cases are provided for by Secs. 11 and 12 of the Contract Act, the former providing that every person of the age of majority and of sound mind is competent to contract, while the latter defines that a person is to be considered of sound mind, when at the time he makes a contract he is capable of understanding it, and of forming a rational judgment as to its effect upon his interests. The latter section does not limit the capability of understanding to being affected by disease, but would include incapacity induced by excessive indulgence in intoxicating matters, for the illustration is, "A sane

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man who is delirious from fever, or who is so drunk that he cannot understand the terms of a contract, or form a rational judgment as to its effect on his interests, cannot contract whilst "such delirium or drunkenness lasts."

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This definition and illustration of what is a void contract on account of lunacy or drunkenness, is somewhat different from the English law, inasmuch as in English law the contract is not void, but only voidable by the lunatic or drunkard, and that only upon the ground that the other contracting party knew of the lunacy or drunkenness at the time of making the contract," in fact that the entering into the contract was a fraud upon the

1 Sec. 8.

2 Peters v. Manuk, 13 Beng. L. R. 383; see also Sanger v. Sanger, L. R. 11 Eq. 470.

3 Sec. 4.

4 Archer v. Watkins, 8 Beng. L. R. 372.

5 Molton v. Camroux, 2 Exch. 487; S. C. 4 Exch. 17; 18 L. J. (Ex.) 68, 356.

promisor. For, as was said by Alderson, B.," "It is just the 66 same as if the defendant had written his name on the bill in his sleep in a state of sonnambulism."

Minority. The provisions of this clause embody the general law relating to infants, viz., that they cannot as a rule bind themselves by contract2 but engraft an exception on it, that by an infant's negotiating a bill otherwise than by accepting it, the other parties to it are as between themselves bound. Smith says, "Infants are incapable of binding themselves by any mercantile contract," and the rule laid down that the other parties to the bill are bound as between themselves is thus put in Byles, "an infant drawing and indorsing bills may convey a title to the indorsee, so that the indorsee can sue the acceptor and all other parties, except the infant himself."4

From the wording of the clause, it would seem it was intended, that it should be incompetent to a minor to make himself liable on a negotiable instrument under any circumstances, even on a bill drawn for necessaries. This is on the principle, that negotiable instruments are mercantile contracts for the purpose of extending credit. The liability of a person incapable of contracting, for necessaries, is limited to his property.

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It will be seen that no mention of acceptance by a minor is made; such would not of course be permissible, for, as we have seen, the Contract Act provides that it is only persons who have attained majority who are capable of contracting, and as an acceptor is the person primarily liable on the instrument, and the other parties only sureties for him, it would be inconsistent with the whole principle of the law of negotiable instruments, that the principal debtor should be contractus incapax.

The age of majority in British India is now regulated by Act IX of 1875, which provides that with the exception of minors

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1 Gore v. Gibson, 13 M. & W. 623.

2 Contract Act, Sec. 11, (App). 3 Sm. Merc. Law, by Dowdeswell, 9th ed., p. 17.

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Byles on Bills, 13th ed., p. 62; Lebel v. Tucker, 8 B. & S. 833; S. C. L. R. 3 Q. B. 77; ex parte Kibble, L. R. 10 Ch. 373, where it was held, that a judgment passed by default on a bill of ex

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of whose person or property, a guardian has been or shall be appointed by a Court of Justice, and minors under the jurisdiction of the Court of Wards, every other person domiciled in British India shall be deemed to have attained majority on the completion of 18 years, and such persons on the completion of 21 years. The Act does not affect the majority of persons, other than those specified and consequently the age of majority of a European British subject is 21 years.'

Corporations. As to the power of corporations to make, indorse, or accept, negotiable instruments, the act itself, by this proviso expressly negatives the conference of any authority on corporations so to do, and leaves the whole question of their power and liability, to be determined by the law under which they were incorporated, Act VI of 1882, is the Indian Companies Act now in force under. Which Companies are incorporated. It is founded mainly on 25 and 26 Vict. c. 89 and contains a few of the provisions of 30 and 31 Vict. c. 131. Act VI of 1882, contains in Sec. 72 corresponding to Sec. 47 of 25 and 26 Vict. c. 89 (The Companies Act) certain provisions relating to promissory notes, bills of exchange and hundis made, drawn, accepted or endorsed, on behalf of any company under the Act,' and by sec. 67, cl. (b) the mode in which they may be executed.3

These two sections determine by whom negotiable instruments may be made, accepted or indorsed, on behalf of companies, and that the signature of such person without the seal of the company to contracts which are not required by law to be under seal is sufficient. But it has been held under the English Act that Sec. 47 does not confer on all companies registered under it, capacity to make, &c., such instruments, but merely prescribes the mode in which companies having the requisite capacity are to exercise it.♦

In Bateman v. Midland Railway Co.," the question raised was, whether a Railway Company constituted under a special Act, which was in the usual form as to the powers given to, and restrictions placed on, the company, and as to the incorporation of

1 Rollo v. Smith, 1 Beng. L. R., O. C. J. 10.

2 Act VI of 1882, s. 72, (App.) 3 Act VI of 1882, s. 67, cl. (b), (App.)

Peruvian Ry. Co. v. Thames

& Mersey Insurance Co., L. R. 2 Ch. 617.

in re

5 L. R. I C. P. 499; S. C. 35 L. J. (C. P.) 205; see the Indian Companies Act, 1866, 7 Beng. L. R. 583.

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