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Section 45: Partial failure of consideration not consisting of money

Negotiable Instruments Act • Official Statutory Text & Practice Guide

Statutory Regulation
Legal Standard
Competent Court / Tribunal
Act 1881
Section 44 All 148 Sections of Negotiable Instruments Act Section 46

Legal Commentary & Landmark Judgments: Section 45

Section 45 governs partial failure of consideration not consisting of money, enacting that where a part of the consideration cannot be ascertained in money without collateral inquiry, the entire instrument remains enforceable in the main action.

  • Non-Monetary Partial Failure: Applies where the alleged failure consists of defective goods, incomplete services, or breach of warranty where damages are unliquidated.
  • Bar on Collateral Inquiry in Summary Actions: The court in an action on the bill will not conduct a complex collateral trial on unliquidated damages; the holder recovers on the instrument, leaving the debtor to a separate suit.
  • Immediate Parties Limitation: Even between immediate parties, only an ascertainable monetary failure can be deducted under Section 44; unascertainable claims fall under Section 45.
Key Landmark Precedents:
  • Warwick v. Nairn (1855) 10 Exch 762: The classical authority holding that a claim of defective quality of goods delivered cannot be set up as a partial defence to a bill of exchange between merchant parties.
  • Firm Chhaganlal v. Firm Nathumal: Affirmed that unliquidated damages arising from breach of underlying supply contracts cannot reduce the sum payable on a negotiable bill under Section 45.
Courtroom Practice & Strategic Litigation Guidance:

In summary suits under Order XXXVII CPC, Section 45 is a lethal weapon for creditors. When the debtor defends by alleging 'the delivered machinery had minor defects', argue Section 45: unliquidated damage claims cannot diminish liability on a negotiable instrument.

Section 44 All 148 Sections of Negotiable Instruments Act Section 46