Payment for Honour

Corresponding to acceptance for honour, there are specific provisions regarding payment for honour. Acceptance for honour is relevant in the case of bills only and not for promissory notes. If a person accepts a promissory note for honour, he does so at his own risk, because he cannot acquire any right of action against the party for those honour the promote is accepted or even against any other party to the instrument.

In order, that a payment for honour may operate as such, it is necessary to satisfy three conditions:

(I) the bill must have been previously noted or protested for non-payment,

(ii) the person paying or his agent, must declare before Notary Public the party for whose honour he pays, and

(iii) such declaration must be recorded by the Notary Public.

A payment for honour may be made by any person, whether he is liable as a party to the bill or not. Thus, the drawer, the drawee or an endorsee, may pay for the honour of a party liable on the bill. Even a stranger may make a payment for honour. It is not necessary that the payment should be made, at the request of the party for whose honour it is made.

It is necessary that, before payment for honour can be made, the instrument should be protested for non-payment. Such protest is made a condition precedent on the ground that if payment is made before such protest, it will be considered that the payment is made on behalf of the acceptor, and therefore, the payer for honour will lose his rights and claims against the drawer, and the endorsers.

The payer for honour is entitled to recover the amount on the strength of the title of the holder. He can recover from the party for whose honour he pays all sums so paid, with interest thereon and also all expenses properly incurred in making such payment. These provisions have no application to a “drawee in case of need” of a bill of exchange.

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