Chapter VI - Of Payment and Interest
Section 80
Section 80: Interest when the instrument states no rate
Section 80 specifies eighteen per cent per annum when the instrument states no interest rate, with a special starting point for an indorser charged after non-payment dishonour.
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Need advice on Section 80?
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
When no rate of interest is specified in the instrument, interest on the amount due thereon shall, notwithstanding any agreement relating to interest between any parties to the instrument, be calculated at the rate of eighteen per centum per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such amount as the Court directs.
Explanation.—When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour.
Key rule and applicability
The general starting point is when the amount ought to have been paid by the party charged. For the indorser described in the explanation, interest runs only from receipt of notice of dishonour. The main clause expressly operates notwithstanding an interest agreement between instrument parties.
Limits and related provisions
Do not present this as the default rate on every business invoice or debt: first establish that this statutory instrument provision applies. Do not automatically use the instrument’s issue date for every defendant. Tender, realisation and the court’s stated post-suit direction must be considered, and the text does not itself prescribe compounding.
Hypothetical business example
Hypothetical: an instrument states no rate and is dishonoured by non-payment. A holder claiming interest from an indorser retains proof of when that indorser received the dishonour notice, rather than using the maker’s payment-due date indiscriminately.
Practical decision flow
Confirm that no interest rate is specified in the relevant instrument.
Identify the party charged and the applicable due-payment or indorser-notice starting point.
Record the principal amount, statutory annual rate, tender or realisation evidence and any relevant court direction.
Practical checklist
Do
- Confirm that no interest rate is specified in the relevant instrument.
- Identify the party charged and the applicable due-payment or indorser-notice starting point.
- Record the principal amount, statutory annual rate, tender or realisation evidence and any relevant court direction.
Avoid
- Do not present this as the default rate on every business invoice or debt: first establish that this statutory instrument provision applies. Do not automatically use the instrument’s issue date for every defendant. Tender, realisation and the court’s stated post-suit direction must be considered, and the text does not itself prescribe compounding.
Glossary
- Annual statutory rate
- The eighteen-per-cent-per-annum rate stated by section 80.
- Indorser’s notice receipt
- The special interest trigger specified by the explanation.
Frequently asked questions
Is the quoted statutory rate six per cent?
No. The current consolidated text states eighteen per cent per annum; its amendment note attributes the change to Act 66 of 1988.
Does every indorser’s interest start on the instrument date?
No. For the indorser described in the explanation, it starts only when that indorser receives notice of dishonour.
Can this rate be applied to every unpaid invoice without further analysis?
No. The applicability of the negotiable-instrument provision must first be established.
Need help applying this provision to your situation?
Contact BizeneedLast updated 10 October 2026