Chapter III - Parties to Notes, Bills and Cheques
Section 45
Section 45: Partial failure of non-money consideration
Section 45 addresses partial failure of non-money consideration that can be valued in money without a collateral enquiry.
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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
Where a part of the consideration for which a person signed a promissory note, bill of exchange or cheque, though not consisting of money, is ascertainable in money without collateral enquiry, and there has been a failure of that part, the sum which a holder standing in immediate relation with such signer is entitled to receive from him is proportionally reduced.
Key rule and applicability
The failed part must be ascertainable in money without that further enquiry, and the holder must stand in immediate relation with the signer. In that setting, the amount recoverable from the signer is proportionally reduced.
Limits and related provisions
A dispute about services or goods does not automatically satisfy all these conditions. Establish the failed part, the required monetary ascertainability and the immediate relationship instead of treating every commercial dispute as an automatic deduction.
Hypothetical business example
Hypothetical: part of agreed non-money consideration for a note fails, and its monetary value is ascertainable without collateral enquiry. A payee in immediate relation with the maker evaluates the corresponding proportional reduction.
Practical decision flow
Identify the specific non-money consideration and failed portion.
Establish whether that portion is ascertainable in money without collateral enquiry.
Confirm the immediate relationship and document the proportional reduction.
Practical checklist
Do
- Identify the specific non-money consideration and failed portion.
- Establish whether that portion is ascertainable in money without collateral enquiry.
- Confirm the immediate relationship and document the proportional reduction.
Avoid
- A dispute about services or goods does not automatically satisfy all these conditions. Establish the failed part, the required monetary ascertainability and the immediate relationship instead of treating every commercial dispute as an automatic deduction.
Glossary
- Non-money consideration
- The consideration other than money addressed by this provision.
- Collateral enquiry
- The further enquiry excluded by the statutory ascertainability condition.
Frequently asked questions
Is every disputed non-money performance covered automatically?
No. The statutory monetary-ascertainability and relationship conditions must be satisfied.
Does the rule eliminate the entire claim regardless of the failed part?
It states a proportional reduction.
Which neighbouring section covers money consideration?
Section 44 addresses partial absence or failure of money consideration.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026