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Section 108: Acceptance for honor

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
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Competent Court / Tribunal
Act 1881
Section 107 All 148 Sections of Negotiable Instruments Act Section 109

Legal Commentary & Landmark Judgments: Section 108

Section 108 regulates 'acceptance for honour', enacting that when a bill has been noted or protested for non-acceptance or better security, any person not already liable may, with the holder's consent, accept it for the honour of any party.

  • Pre-requisite of Noting or Protest: Acceptance for honour cannot occur until the bill has been officially noted or protested for dishonour.
  • Stranger / Non-Party Intervention: A third party not already liable on the bill steps forward to protect the credit of the drawer or an indorser.
  • Consent of Holder Required: The holder has the discretion to refuse and insist on immediate recourse, but may consent to the acceptance for honour.
Key Landmark Precedents:
  • Hoare v. Cazenove (1812) 16 East 391: The classical authority establishing that acceptance for honour requires prior protest; without protest, the intervention does not create negotiable liability.
  • Phillips v. Im Thurn (1866) LR 1 CP 463: Affirmed that an acceptor for honour is estopped from denying the genuineness of the signature of the party for whose honour they accepted.
Courtroom Practice & Strategic Litigation Guidance:

Acceptance for honour is a sophisticated merchant banking mechanism. When a trade financing house steps in to accept an export bill to protect a supplier's credit, ensure the bill has been formally protested under Section 100 before the acceptance is executed.

Section 107 All 148 Sections of Negotiable Instruments Act Section 109