Drawee in Case of Need

Drawee in Case of Need

The maker of a bill of exchange or cheque is called the “drawer”; the person thereby directed to pay is called the “drawee”. When the drawer of a bill mentions an alternative drawee to whom, the bill can be presented for acceptance in case the actual drawee refuses to accept or refuses to pay after acceptance, such an alternative’ drawee is called a drawee in case of need.

Definition: Drawee in case of need, when in the bill or in any endorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need, such person is called a ‘drawee in case of need’. [Negotiable Instruments Act, 1881 (26 of 1881)]

Explanation – There are always at least two parties to a negotiable instrument such as the bill of exchange, a promissory note or cheque with the drawer and drawee. The drawee in case of a bill of exchange is the person who accepts the bill. He is the person whose name is mentioned in the bill as one to whom the drawer should resort to in case of dishonor of bill by the acceptor (drawee). Consent of such person whose name is mention cm the bill is essential. He (drawee in a case or need) may be asked ta pay the bill if the acceptor refuses to pay the bill on maturity, This kind of addition is the security to the drawer from the drawee.

When the bill or in any endorsement thereon the name of any person is given in addition to the drawee to be resorted to in case of need, such person is called a “drawee in case of need”. The drawee of a cheque is always a banker. So a banker is called the drawee with regard to a cheque. A drawee is a person or other entity that pays the owner of a check or draft. The holder of the check is the payee and the check writer the drawer. Where a drawee in case of need is named in a bill of exchange, or in any endorsement thereon, the bill is not dishonored until it has been dishonored by such drawee. The person named in the instrument, to whom or to whose order the money is by the instrument directed to be paid, is called the “payee”.