Chapter III - Parties to Notes, Bills and Cheques
Section 26
Section 26: Capacity to bind parties on instruments
Section 26 ties instrument liability to contractual capacity, states a specific rule for minors and preserves the separate limits on corporate powers.
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Need advice on Section 26?
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
Every person capable of contracting, according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, indorsement, delivery and negotiation of a promissory note, bill of exchange or cheque.
Minor.—A minor may draw, indorse, deliver and negotiate such instrument so as to bind all parties except himself.
Nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cases in which, under the law for the time being in force, they are so empowered.
Key rule and applicability
A person capable of contracting under the applicable law can bind themselves through the specified instrument acts. A minor may perform the listed drawing, indorsement, delivery and negotiation acts so as to bind other parties, but not the minor personally.
Limits and related provisions
Do not treat a minor’s involvement as automatically freeing every other party. Conversely, section 26 does not itself give a corporation unlimited power to make, indorse or accept instruments; its powers must exist under applicable law.
Hypothetical business example
Hypothetical: an instrument passes through a minor’s indorsement before reaching a business. The business separates the minor’s personal-capacity position from the obligations of the other parties and examines the complete transaction.
Practical decision flow
Identify each party and the law governing contractual capacity.
For a minor, distinguish the listed acts from personal liability.
For a corporation, verify the relevant powers and signatory authority rather than relying on section 26 alone.
Practical checklist
Do
- Identify each party and the law governing contractual capacity.
- For a minor, distinguish the listed acts from personal liability.
- For a corporation, verify the relevant powers and signatory authority rather than relying on section 26 alone.
Avoid
- Do not treat a minor’s involvement as automatically freeing every other party. Conversely, section 26 does not itself give a corporation unlimited power to make, indorse or accept instruments; its powers must exist under applicable law.
Glossary
- Contractual capacity
- The ability to contract under the law applicable to the person.
- Corporate power
- The authority a corporation has under applicable law to undertake the instrument act.
Frequently asked questions
Does a minor personally become bound by the listed acts?
The section says those acts may bind all parties except the minor.
Does a minor’s indorsement necessarily release everyone else?
No. The provision expressly distinguishes other parties from the minor.
Does section 26 grant every corporation instrument powers?
No. The final paragraph preserves the need for those powers under the law in force.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026