(1) where the drawee is a fictitious person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the instrument;

(2) where the indorser is the person to whom the instrument is presented for payment;

(3) where the instrument was made or accepted for his accommodation.

84448. Notice of nonpayment where acceptance refused

Where due notice of dishonor by nonacceptance has been given, notice of a subsequent dishonor by nonpayment is not necessary, unless in the meantime the instrument has been accepted.

84449. Omission to give notice of nonacceptance; effect

An omission to give notice of dishonor by nonacceptance does not prejudice the rights of a holder in due course subsequent to the

omission.

§ 4450. Protest; when necessary; when unnecessary

Where any negotiable instrument has been dishonored it may be protested for nonacceptance or nonpayment, as the case may be; but protest is not required except in the case of foreign bills of exchange. Article H-Discharge of Negotiable Instruments

4461. Methods of discharge

A negotiable instrument is discharged:

(1) by payment in due course by or on behalf of the principal debtor;

(2) by payment in due course by the party accommodated, where the instrument is made or accepted for accommodation; (3) by the intentional cancellation thereof by the holder;

(4) by any other act which will discharge a simple contract for the payment of money;

(5) when the principal debtor becomes the holder of the instru ment at or after maturity in his own right.

§ 4462. Persons secondarily liable; discharge

A person secondarily liable on the instrument is discharged: (1) by any act which discharges the instrument;

(2) by the intentional cancellation of his signature by the holder;

(3) by the discharge of a prior party;

(4) by a valid tender of payment made by a prior party; (5) by a release of the principal debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved;

(6) by any agreement binding upon the holder to extend the time of payment, or to postpone the holder's right to enforce the instrument, unless made with the assent of the party secondarily liable, or unless the right of recourse against such party is expressly reserved.

§ 4463. Rights of parties secondarily liable who pay instruments Where the instrument is paid by a party secondarily liable thereon, it is not discharged; but the party so paying it is remitted to his former rights as regards all prior parties, and he may strike out his own and all subsequent indorsements, and again negotiate the instrument, except:

(1) where it is payable to the order of a third person, and has been paid by the drawer; and

(2) where it was made or accepted for accommodation, and has been paid by the party accommodated.

§ 4464. Renunciation by holder

The holder may expressly renounce his rights against any party to the instrument, before, at, or after its maturity. An absolute and unconditional renunciation of his rights against the principal debtor made at or after the maturity of the instrument discharges the instrument. But a renunciation does not affect the rights of a holder in due course without notice. A renunciation must be in writing, unless the instrument is delivered up to the person primarily liable

thereon.

§ 4465. Unintentional cancellation; burden of proof

A cancellation made unintentionally, or under a mistake or without the authority of the holder, is inoperative; but where an instrument or any signature thereon appears to have been canceled the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake or without authority.

§ 4466. Material alteration; effect

Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration, and subsequent indorsers.

But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor.

84467. Material alteration defined

Any alteration which changes:

(1) the date;

(2) the sum payable, either for principal or interest;
(3) the time or place of payment;

(4) the number or the relations of the parties;

(5) the medium or currency in which payment is to be madeor which adds a place of payment where no place of payment is specified, or any other change or addition which alters the effect of the instrument in any respect, is a material alteration.

Subchapter II-Bills of Exchange

Article A-Form and Interpretation

4471. Bill of exchange defined

A bill of exchange is an unconditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. § 4472. Bill not an assignment of funds in hands of drawee

A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof, and the drawee is not liable on the bill unless and until he accepts the same. § 4473. Bill addressed to two or more drawees

A bill may be addressed to two or more drawees jointly, whether they are partners or not; but not to two or more drawees in the alternative or in succession.

§ 4474. Inland and foreign bills defined

An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within the Canal Zone. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill.

84475. Treatment of bill as promissory note

Where in a bill drawer and drawee are the same person, or where the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or a promissory note.

§ 4476. Referee in case of need

The drawer of a bill and any indorser may insert thereon the name of a person to whom the holder may resort in case of need; that is to say in case the bill is dishonored by nonacceptance or nonpayment. That person is called the referee in case of need. It is in the option of the holder to resort to the referee in case of need or not as he may see fit.

Article B-Acceptance

§ 4481. Acceptance; definition; method of making

The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee. It may not express that the drawee will perform his promise by any other means than the payment of

money.

§ 4482. Holder entitled to acceptance on face of bill

The holder of a bill presenting the same for acceptance may require that the acceptance be written on the bill and, if his demand is refused, may treat the bill as dishonored.

84483. Acceptance by separate instrument

Where an acceptance is written on a paper other than the bill itself, it does not bind the acceptor except in favor of a person to whom it is shown and who, on the faith thereof, receives the bill for value. 84484. Promise to accept; equivalent to acceptance

An unconditional promise in writing to accept a bill before it is drawn is deemed an actual acceptance in favor of every person, who upon the faith thereof, receives the bill for value.

4485. Time allowed drawee to accept

The drawee is allowed 24 hours after presentment in which to decide whether or not he will accept the bill; but the acceptance, if given, dates as of the day of presentation.

§ 4486. Liability of drawee retaining or destroying bill

Where a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within 24 hours after the delivery, or within such other period as the holder may allow, to return the bill accepted or nonaccepted to the holder, he will be deemed to have accepted the

same.

§ 4487. Acceptance of incomplete bill

A bill may be accepted before it has been signed by the drawer, or while otherwise incomplete, or when it is overdue, or after it has been dishonored by a previous refusal to accept, or by nonpayment. But when a bill payable after sight is dishonored by nonacceptance and the drawee subsequently accepts it, the holder in the absence of any different agreement, is entitled to have the bill accepted as of the date of the presentment.

8 4488. Kinds of acceptance

An acceptance is either general or qualified. A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn.

§ 4489. General acceptance

An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere.

8 4490. Qualified acceptance

An acceptance is qualified which is:

(1) conditional; that is to say, which makes payment by the acceptor dependent on the fulfillment of a condition therein stated;

(2) partial; that is to say, an acceptance to pay part only of the amount for which the bill is drawn;

(3) local; that is to say, an acceptance to pay only at a particular place;

(4) qualified as to time;

(5) the acceptance of some one or more of the drawees, but not of all.

§ 4491. Qualified acceptance; rights of parties

The holder may refuse to take a qualified acceptance, and if he does not obtain an unqualified acceptance he may treat the bill as dishonored by nonacceptance. Where a qualified acceptance is taken the drawer and indorsers are discharged from liability on the bill, unless they have expressly or impliedly authorized the holder to take a qualified acceptance, or subsequently assent thereto. When the drawer or an indorser receives notice of a qualified acceptance, he must, within a reasonable time, express his dissent to the holder, or he will be deemed to have assented thereto.

Article C-Presentment for Acceptance

§ 4501. Necessity of making presentment for acceptance Presentment for acceptance must be made:

(1) where the bill is payable after sight, or in any other case, where presentment for acceptance is necessary in order to fix the maturity of the instrument; or

(2) where the bill expressly stipulates that it shall be presented for acceptance; or

(3) where the bill is drawn payable elsewhere than at the residence or place of business of the drawee.

Presentment for acceptance is not necessary in any other case in order to render any party to the bill liable.

§ 4502. Failure to present as releasing drawer and indorsers

Except as herein otherwise provided, the holder of a bill which is required by section 4501 of this title to be presented for acceptance must either present it for acceptance or negotiate it within a reasonable time. If he fails to do so, the drawer and all indorsers are discharged.

§ 4503. Time for making; persons to whom made

Presentment for acceptance must be made by or on behalf of the holder at a reasonable hour, on a business day and before the bill is overdue, to the drawee or some person authorized to accept or refuse acceptance on his behalf; and:

(1) where a bill is addressed to two or more drawees who are not partners, presentment must be made to them all, unless one has authority to accept or refuse acceptance for all, in which case presentment may be made to him only;

(2) where the drawee is dead, presentment may be made to his personal representative;

(3) where the drawee has been adjudged a bankrupt or an insolvent or has made an assignment for the benefit of creditors, presentment may be made to him or to his trustee or assignee.

§ 4504. Days on which presentment may be made

A bill may be presented for acceptance on any day on which negotiable instruments may be presented for payment under sections 4403 and 4416 of this title. When Saturday is not otherwise a holiday, presentment for acceptance may be made before twelve o'clock noon, on that day.

§ 4505. Insufficient time

Where the holder of a bill drawn payable elsewhere than at the place of business or the residence of the drawee has not time with the exercise of reasonable diligence to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused and does not discharge the drawers and indorsers. 84506. Excuse

Presentment for acceptance is excused and a bill may be treated as dishonored by nonacceptance, in either of the following cases:

(1) where the drawee is dead, or has absconded, or is a fictitious person, or a person not having capacity to contract by bill; (2) where, after the exercise of reasonable diligence, presentment cannot be made;

(3) where, although presentment has been irregular, acceptance has been refused on some other ground.

84507. Dishonor by nonacceptance

A bill is dishonored by nonacceptance:

(1) when it is duly presented for acceptance and such an acceptance as is prescribed by this chapter is refused or cannot be obtained; or

(2) when presentment for acceptance is excused and the bill is not accepted.

§ 4508. Duty of holder on nonacceptance

If a bill is duly presented for acceptance and is not accepted within the prescribed time the person presenting it must treat the bill as dishonored by nonacceptance or he loses the right of recourse against the drawer and indorsers.

4509. Rights of holder on nonacceptance

If a bill is dishonored by nonacceptance, an immediate right of recourse against the drawers and indorsers accrues to the holder and no presentment for payment is necessary.

Article D-Protest

84511. Necessity for protest

If a foreign bill appearing on its face for nonacceptance, and by nonacceptance, it must be duly protested for nonacceptance, and where such a bill which has not previously been dishonored by nonacceptance is dishonored by nonpayment, it must be duly protested for nonpayment. If it is not so protested, the drawer and indorsers are discharged. Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dishonor is unnecessary. 4512. Method of making

The protest must be annexed to the bill, or must contain a copy thereof, and must be under the hand and seal of the notary making it, and must specify:

(1) the time and place of presentment;