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Commercial Paper

Discharge From Liability



The most common way to be discharged from liability on a commercial paper is through payment. The intentional CANCELLATION OF AN INSTRUMENT by the holder by either marking the instrument paid or by destroying it discharges all liability.



The holder may also discharge an individual from liability for payment through renunciation. This can be accomplished when a document is signed and delivered by the holder or when a paper is relinquished to the party who is being discharged. A stop-payment order put on a check by its drawer has the effect of discharging the bank from liability for refusing to honor the check when presented for payment. It cannot, however, discharge the drawer from liability in cases where the drawer was contractually or otherwise obligated to pay the payee.

Additional topics

Law Library - American Law and Legal InformationFree Legal Encyclopedia: Coagulation to Companies HouseCommercial Paper - Types Of Commercial Paper, Negotiability, Endorsements, Liability Of Parties, Secondary Liability, Holders