Question

Which provision of the Negotiable Instruments Act discusses about material alteration of an instrument and its effects

• A. Section 77
• B. Section 88
• C. Section 87
• D. Section 78

Hint:

For the NI Act, remember that any unauthorized material alteration is fatal to the instrument's validity (Section 87). This protects the integrity of negotiable instruments. However, an alteration made with the consent of the parties or to fulfill their common intention is valid.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question asks for the specific section of the Negotiable Instruments Act, 1881, that deals with the legal consequences of making a "material alteration" to a negotiable instrument (like a cheque, promissory note, or bill of exchange).
Step 2: Key Formula or Approach:
The relevant statutory provision is Section 87 of the Negotiable Instruments Act, 1881.
Section 87. Effect of material alteration.— "Any material alteration of a negotiable instrument renders the same void as against any one who is a party thereto at the time of making such alteration and does not consent thereto, unless it was made in order to carry out the common intention of the original parties;"
Step 3: Detailed Explanation:
Section 87 lays down a strict rule regarding unauthorized changes to an instrument. A 'material alteration' is one which changes the legal character, rights, or liabilities of the parties to the instrument. Examples include changing the date, sum payable, time of payment, or place of payment.
The effect of such an unconsented material alteration is that the instrument becomes void. This means all parties who were on the instrument at the time of the alteration are discharged from their liability.
- Section 77 deals with expressing the rate of exchange.
- Section 88 protects an acceptor or indorser who pays a materially altered instrument if the alteration is not apparent.
- Section 78 deals with to whom payment should be made.
Step 4: Final Answer:
The provision that discusses material alteration and its effects is Section 87.