(b.) Is precluded from denying to a holder in due
course the genuineness and regularity in all
respects of the drawer's signature and all previous
indorsements;

(c.) Is precluded from denying to his immediate or
a subsequent indorsee that the bill was at the
time of his indorsement a valid and subsisting
bill, and that he had then a good title thereto.
(a.) Vide §§ 17, 19, 44.

(b.) Vide $$ 43 and 47.

Failure to

(c.) The engagements of the drawer and indorser are conditional (1), on the bill being duly presented, vide §§ 40, 41, and 45; (2), on the requisite steps on dishonour being duly taken, vide § 48-51. These conditions are part of the contract on the bill between the drawer or indorser, and the payee or indorsee, and the holder as coming in their place, and not incidents of the remedy for the breach of it. comply with these conditions in a British bill is a good defence in the Courts of a country which does not recognise them as conditions of the contract; and on the other hand, if by the law of the country where the bill is issued or indorsed these conditions are not implied in the drawer's or indorser's contract, they will not be held to be part of the contract, when the bill is sued on in this country. In the case, therefore, of a bill drawn in one country and negotiated, accepted or payable in another, the law to be applied is the law of the country where the contract is made, and not that of the country where action is brought, vide § 72 (2).

The conditions, however, are not in international questions that presentment shall be made in the manner prescribed in the Act, and that the steps on dishonour therein prescribed shall be taken, but merely that presentment shall be made, and that the requisite steps shall thereafter be taken. Accordingly, the holder's duties as to presentment are regulated by the law of the place where it is made, and the necessity of a protest or notice of dishonour by the law of the place of dishonour, and the sufficiency of these acts by the law of the

§ 55.

$ 55.

Stranger signing bill liable as indorser.

place where they are made, vide § 72 (3). See in illustration,
Horne v. Rouquette, 3 Q. B., Div. 514.

For

The engagement of the drawer or indorser is to compensate
the holder, and not merely to pay the sum in the bill.
the items included in compensation, vide § 57. A drawer
may have limited or negatived his liability, vide § 16, and in
the latter case he is not liable on the bill, but he may be
liable otherwise—e.g., where he has delivered a forged accept-
ance, although he has limited his liability. He can prove by
parole that the delivery of the bill was merely to pass the
property, or for a special purpose, or was conditional, vide § 21;
but he cannot prove verbal alterations, varying the contract in
the bill or indorsement-e.g., that the holder is to realise
certain securities before having recourse on the indorser, Abrey
v. Crux, L. R. 5, C. P. 37; for it is not relevant to allege that
the written contract is subject to a modification not expressed
in writing, vide note on § 100, but see Castrique v. Buttigiez,
10 Moore, P. C. 94.

56. Where a person signs a bill otherwise than as drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course (a).

(a.) No one can accept a bill except the drawee, vide § 17, a referee in case of need, vide § 15, or an acceptor for honour, vide § 65. If a person, who is not the drawee, signs a bill, his signature will be interpreted as an indorsement, even though he sign below the drawer's signature in the place where an acceptor usually signs; but apparently if he were to prefix to his signature words of acceptance, this section would not apply, because he has signed as acceptor, and his signature will be wholly ineffectual. The addition of the words "as cautioner," or equivalent words, is only important as pointing out the character of his subscription, but does not limit his liabilities to a holder in due course. An indorsement by a stranger to a bill is known as an aval, and by the law merchant can be given only to a person who thereafter takes the bill. The drawer of a bill cannot avail himself

of an indorsement per aval, because the drawer's signature is
the first to be placed on a bill in ordinary course; and if he
desires to have further security the bill ought to be drawn
upon the intended cautioner, who will then accept along with
the other drawee, appending the words "as cautioner " to his
signature, to show his character in a question with his co-
acceptor. In Walker's Trs. v. M'Kinlay, 6 R. 1132, 7 R., H. L.
85, 5 Ap. Cases, 754, A. drew a bill upon B. which was accepted
by him, and after being indorsed by C., was returned to A.
who discounted it. The bill was not paid; and in an action
by A.'s representatives against C.'s representatives, it was held
that C. was not liable on his indorsement, because an indorser
by the law merchant can only undertake an obligation to
subsequent holders of the bill and not to prior holders.
Under this section, which does not seem to extend the rules of
the law merchant, the giver of an aval undertakes the liabili-
ties of an indorser, which are to pay to a subsequent holder,
but not to pay to the drawer. An indorser per aval has no
right of recourse against the drawer, unless he has given the
aval on his behalf, but his obligations remain the same as if
he had such right. An aval is not struck at by 19 & 20
Vict. c. 60, § 6, which enacts "that all guarantees, securities,
or cautionary obligations made or granted by any person
shall be in writing, and shall be subscribed by the person
undertaking such guarantee, security, or cautionary obligation,

or by some person duly authorised by him or them,
otherwise, the same shall have no effect," Macdonald v. Union
Bank of Scotland, 29th March, 1864, 2 M. 963. It is not
a collateral engagement, but one on the bill; and because
the original bill has incident to it the capacity of an indorse-
ment in the nature of an aval on it, such an indorsement does
not require a new stamp, Walker's Trs. v. M'Kinlay, supra.

§ 56.

damages

57. Where a bill is dishonoured, (a) the measure of damages, which shall be deemed to be liquidated against pardamages, shall be as follows:

(1.) The holder may recover from any party liable

ties to dishonoured bill.

§ 57.

on the bill, and the drawer who has been com-
pelled to pay the bill may recover from the
acceptor, and an indorser who has been compelled
to pay the bill may recover from the acceptor
or from the drawer, or from a prior indorser-
(a.) The amount of the bill :

(b.) Interest thereon from the time of presentment

for payment if the bill is payable on demand, and from the maturity of the bill in any other case (b):

(c.) The expenses of noting, or, when protest is necessary, and the protest has been extended, the expenses of protest (c).

(2.) In the case of a bill which has been dishonoured

abroad, in lieu of the above damages, the holder may recover from the drawer or an indorser, and the drawer or an indorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange with interest thereon until the time of payment (d). (3.) Where by this Act interest may be recovered

as damages, such interest may, if justice require it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as interest proper.

(a.) Vide § 43 and 47.

(b.) Interest means interest at five per cent., vide note (a) on § 9.

(c.) Protest is necessary where a foreign bill is dishonoured,

vide § 51 (2); where a bill is accepted for honour, vide § 65 ; where after acceptance for honour it is presented for payment to the acceptor for honour, vide § 67 (1); and where a bill is dishonoured by the acceptor for honour, vide § 67 (4).

(d.) Where there is a course of trade between two places, bills are drawn from the one place to the other for the amount of the debts due to sellers by purchasers. If on a balance of transactions there are more debts due by merchants in A. to merchants in B. than by merchants in B. to merchants in A., the balance due to merchants in B. must be paid by remitting money. Accordingly there is a demand for bills on B. in order to save the risk and expense of remitting coin. A merchant or banker in A., who has money owing to him in B., can sell a draft on his correspondent there for a premium in addition to the sum in the bill, but a banker in B. who has drawn a bill on his correspondent in A. cannot obtain for it the full sum. He must sell it at a discount. This difference >etween the sum paid and the sum in the bill is called the xchange. When the debts of the two places balance one nother the exchange is at par. There is no premium paid, nd no discount allowed. Where a bill drawn from one country payable in another, is dishonoured, the holder is entitled to recover the amount in the bill which he ought to have received at the place of payment as well as certain charges. He accordingly draws a bill upon the drawer for such a sum as will yield him the sum in his dishonoured bill by being discounted at the place of payment of the dishonoured bill. If bills on A. are at a discount he draws the bill for the sum in the bill plus the amount of the discount and expenses, and discounts it to receive the amount which he ought to have received, while the drawer has to pay the amount of the discount in addition to returning the sum in the bill. Besides the sum in the bill, which the holder thus >btains payment of, he is entitled to include in the new bill he amount of the charges to which he is put-viz., the stamp In the bill, and the broker's commission. The additional im for which he draws is called the re-exchange.

If bills on A. are at a premium he draws a bill for such a m as will produce with the premium thereon the sum

$ 57.