Section 26 NI Act: Capacity to make, etc., promissory notes, etc
Negotiable Instruments Act, 1881
Section 26 NI Act at a Glance
Section 26 NI Act states who has the capacity to make, draw, accept, indorse, deliver, and negotiate a promissory note, bill of exchange, or cheque, and sets the rules for minors and corporations.
Section 26 NI Act Bare Act Text
26. Capacity to make, etc., promissory notes, etc.
Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.
Minor.—A minor may draw, indorse, deliver and negotiate such instrument so as to bind all parties except himself.
Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered.
Section 26 NI Act in Simple Words
Section 26 NI Act governs the legal capacity of parties to make, draw, accept, indorse, deliver, and negotiate a promissory note, a bill of exchange, or a cheque.
Under the first paragraph of Section 26 NI Act, every person who is capable of contracting, according to the law to which that person is subject, may bind that person and be bound by the making, drawing, acceptance, indorsement, delivery, and negotiation of a promissory note, bill of exchange, or cheque.
Under the second paragraph of Section 26 NI Act, a minor may draw, indorse, deliver, and negotiate such an instrument so as to bind all parties except the minor.
Under the third paragraph of Section 26 NI Act, nothing in Section 26 NI Act empowers a corporation to make, indorse, or accept such instruments except in cases in which, under the law for the time being in force, the corporation is so empowered.
When Section 26 NI Act Applies
- A person capable of contracting according to the law to which that person is subject may bind that person and be bound by making, drawing, accepting, indorsing, delivering, and negotiating a promissory note, bill of exchange, or cheque.
- A minor may draw, indorse, deliver, and negotiate such an instrument so as to bind all parties except the minor.
- A corporation is not empowered by Section 26 NI Act to make, indorse, or accept such instruments unless empowered under the law for the time being in force.
Example of Section 26 NI Act
FAQs on Section 26 NI Act
What is Section 26 NI Act?▼
Section 26 NI Act sets out who has the capacity to be bound by making, drawing, accepting, indorsing, delivering, and negotiating a promissory note, bill of exchange, or cheque. Section 26 NI Act also states how instruments signed or transferred by a minor or a corporation operate.
Who can bind themselves on a promissory note, bill of exchange, or cheque under Section 26 NI Act?▼
Every person capable of contracting according to the law to which that person is subject. Such a person may bind that person and be bound by making, drawing, accepting, indorsing, delivering, and negotiating the instrument.
Can a minor be held liable on a cheque or bill of exchange under Section 26 NI Act?▼
No. Under Section 26 NI Act, a minor may draw, indorse, deliver, and negotiate a promissory note, bill of exchange, or cheque so as to bind all parties except the minor.
Are other parties bound if a minor indorses and negotiates a cheque under Section 26 NI Act?▼
Yes. Section 26 NI Act provides that a minor may draw, indorse, deliver, and negotiate the instrument so as to bind all parties except the minor.
Does Section 26 NI Act give every corporation the power to make, indorse, or accept a bill of exchange or promissory note?▼
No. Section 26 NI Act states that nothing in Section 26 NI Act empowers a corporation to make, indorse, or accept such instruments except where the corporation is empowered to do so under the law for the time being in force.
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Sources: Bare Act Text, Negotiable Instruments Act, 1881 (India Code) ·