Question

explain the liability of makers , acceptors , drawers , drawees , indorsers , and accommodation parties

Answer 1

The liabilities of the different parties in a transaction are as follows:

• Maker: The Maker of a promissory note is primarily liable for making the payment to the payee. He cannot escape his liability on any ground.
• Acceptor: The Acceptor in a bill of exchange transaction is the one who is primarily liable to discharge the liability on the bill in full.
• Drawer: The Drawer of a Bill is the one who has actually provided the goods or services for which payment is to be made. He's not liable to make the payment.
• Drawee: In a bill of exchange, the drawee is the person who accepts a liability of the amount specified in the bill of exchange. Thus, in case of bills of exchanges, the drawee is the person who's primarily liable to pay.
• Indorser: An indorser effectively guarantees the genuineness of all the prior indorsements. In case of general indorsers he also guarantees that the instrument is genuine & vald.
• Accommodation parties: An accommodation party is a party that signs a negotiable instrument as a surety. If the primary payer defaults, the accommodation party is wholly responsible for the payment by itself regardless of whether he received the full value in exchange of the bill or not.

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