Chapter XVI - Of International Law
Section 134
Section 134: Governing law for foreign-instrument liability
Section 134 identifies the governing law for particular parties' liabilities on foreign negotiable instruments, subject to a contrary contract.
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Need advice on Section 134?
This article is for general information. Refer to the Negotiable Instruments Act, 1881 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
In the absence of a contract to the contrary, the liability of the maker or drawer of a foreign promissory note, bill of exchange or cheque is regulated in all essential matters by the law of the place where he made the instrument, and the respective liabilities of the acceptor and indorser by the law of the place where the instrument is made payable.
Illustration: A bill of exchange was drawn by A in California, where the rate of interest is 25 per cent., and accepted by B, payable in Washington, where the rate of interest is 6 per cent. The bill is endorsed in India, and is dishonoured. An action on the bill is brought against B in India. He is liable to pay interest at the rate of 6 per cent. only; but if A is charged as drawer, A is liable to pay interest at the rate of 25 per cent.
Key rule and applicability
Absent a contract to the contrary, a foreign instrument's maker or drawer has liability regulated in essential matters by the law of the place where that person made the instrument. The acceptor's and indorser's respective liabilities are governed by the law of the place where it is made payable. The correct role and the correct connecting place therefore need to be identified separately for each defendant.
Limits and related provisions
This is a specified conflict-of-laws rule, not a statement that one country's law governs every issue in every international transaction. A contrary contract matters under the opening qualification, and Section 135 separately addresses dishonour and notice. The California twenty-five per cent and Washington six per cent figures in the statutory illustration are historical illustration facts; they must not be presented as current foreign interest rates.
Hypothetical business example
Hypothetical: A business draws a foreign bill in one country and an acceptor accepts it payable in another. With no contrary contract, the adviser identifies the law connected to each party under Section 134. Any actual interest or liability rule is researched under the applicable current law rather than copied from the Act's historical illustration.
Practical decision flow
Identify the foreign instrument and whether the claim is against its maker, drawer, acceptor or indorser.
Record the place of making, the specified place of payment and any contract that changes the default rule.
Obtain guidance on the applicable law for the relevant liability and keep dishonour and notice questions distinct.
Practical checklist
Do
- Identify the foreign instrument and whether the claim is against its maker, drawer, acceptor or indorser.
- Record the place of making, the specified place of payment and any contract that changes the default rule.
- Obtain guidance on the applicable law for the relevant liability and keep dishonour and notice questions distinct.
Avoid
- This is a specified conflict-of-laws rule, not a statement that one country's law governs every issue in every international transaction. A contrary contract matters under the opening qualification, and Section 135 separately addresses dishonour and notice. The California twenty-five per cent and Washington six per cent figures in the statutory illustration are historical illustration facts; they must not be presented as current foreign interest rates.
Glossary
- Connecting place
- The location the section uses to select the law for a particular party's liability.
- Contract to the contrary
- A contractual arrangement relevant to the section's stated qualification of its default rule.
Frequently asked questions
Does the same default law govern every party?
Not necessarily. The maker or drawer is linked to the place of making, while the acceptor and indorser are linked to the place of payment.
Are the illustration's American interest rates current advice?
No. They are the facts of the historical statutory illustration, not a representation of current California or Washington law.
Does the section disregard a contrary contract?
No. Its default rule expressly applies in the absence of a contract to the contrary.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026