When a bill of exchange has been noted or protested for non acceptance or for better security, and any person accepts it supra protest for honor of the drawer or of any one of the indorses such person is called the acceptor for honor.
When the holder of a bill presents it to the drawee for acceptance and he does not accept the same i.e. the bill of exchange is dishonored and the same has been noted or protested for dishonor, any third person who accepts it for honor of the drawee or indorser is called an acceptor for honor.
When a bill of exchange has been noted or protested for non acceptance or for better security, any person not being a party already liable thereon may, with the consent of the holder, by writing on the bill, accept the same for honor of any party thereto (Sec 108) A person desiring to accept for honor must, by writing on the bill under his and, declare that he accepts under protest bill for honor of the drawer or of a particular endorser whom the names or generally for honor (Sec 109) Where the acceptance does not express for whose honor it is made it shall be deemed to be made for the honor of the drawer (Sec110).
As general rue, the drawee or any person on whom the bill is drawn can accept e bill and if either of the person refuses to honor the bill, the bill is dishonored immediately. However, where the bill is so dishonored by any of the parties supposed to accept the bill, and the bill has been noted or protested from non acceptance or where better security has been demanded by the notary and the drawee refuses to give security any person may accept the bill for honor or for supra protest. The bill on such acceptance remains alive till maturity. It cannot be treated as dishonored immediately. The holder gets an additional person i.e. an acceptor for honor, which also becomes liable on the bill.
Essentials of valid acceptance for honor
1) The holder must consent to acceptance for honor. The holder cannot be compelled to assent to acceptance for honor.
2) The bill must have been noted or protested for the non-acceptance or for better security.
3) Acceptance for honor can be made by a person who is not already liable on the bill. Drawee of the bill when he refuses to accept the bill becomes a stranger. He may therefore accept the bill for honor of any party thereto.
4) It must be made by writing on the bill.
5) It must be for the whole amount due on the bill
6) Acceptance must be for the honor of any party already liable on the bill.
7) Acceptance for honor must be made before to bill is overdue.
8) Stranger paying for honor must, before payment, declare before a Notary Public the party for whose honor he pays and the Notary Public must have recorded such a declaration.
A specimen of Acceptance for Honor
The acceptor for honor writes as below, across the bill as given under specimens of bills of exchange above: Accepted Supra Protest or Accepted for AB.
Rights and liabilities of an acceptor for honour (Sec 111& 112).
1) Acceptor for honor binds himself to all the subsequent parties to pay the amount of the bill if the drawee does not pay.
2) The party for whose honor he accepts to pay the amount and all price parties are liable to compensate the acceptor for honor for all loss or damage sustained by him in consequence of such acceptance. The liability of an acceptor or honor is conditional he is liable only if the drawee fails to pay the bill.
The bill of exchange should be presented at its maturity to the drawer for payment and it must be dishonored by the drawer and noted or protested for non-payment to charge an acceptor for honor (Sec 112) The bill must be presented or forwarded for presentment to the drawee not later than the day next after the day of its maturity.