Estoppel of acceptor of bill of exchange, bailee or licensee
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Summary
An acceptor of a bill of exchange cannot deny that the drawer had authority to draw or endorse the bill. Similarly, a bailee or licensee cannot deny that their bailor or licensor had authority to make the bailment or grant the licence when it began. Limited exceptions allow the acceptor to deny that the bill was actually drawn by the person it purports to be from, and a bailee who hands goods to someone other than the bailor may prove that person had rights against the bailor.
Example
Priya accepts a bill presented as drawn by Karan for his employer. Later she refuses to pay claiming Karan had no authority to draw it. She cannot deny Karan's authority to draw or endorse the bill, though she may still contend that the bill was not actually drawn by Karan.
Bare Act
Enacted textNo acceptor of a bill of exchange shall be permitted to deny that the drawer had authority to draw such bill or to endorse it; nor shall any bailee or licensee be permitted to deny that his bailor or licensor had, at the time when the bailment or licence commenced, authority to make such bailment or grant such licence.
Explanation 1.-The acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.
Explanation 2.-If a bailee delivers the goods bailed to a person other than the bailor, he may prove that such person had a right to them as against the bailor.
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