In relation to negotiable instruments:
i) Define the term “qualified acceptance”.
ii) Highlight four forms of qualified acceptance
Definition of qualified acceptance
- A qualified acceptance is one whereby some qualification is introduced.
- This is acceptance whereby the drawee modifies or varies the bill.
Forms of qualified acceptance
- Partial acceptance where the drawee undertakes to honor only part of the sum ordered to be paid.
- Local acceptance – involves the place where the bill must be honored. Qualification as to time – where the drawee attempts to extend the time for acceptance and payment.
- Conditional acceptance -where the drawee specifies some condition about the charges, costs and so on in connection with the bill.
- Failure of one drawee to sign – where one of the drawees named refuses or fails to sign the bill, if the holder agrees to accept the signatures of the others, it amounts to qualified acceptance.