Negotiable Instruments Act Section 36 — Liability of prior parties to holder in due course

CHAPTER III PARTIES TO NOTES, BILLS AND CHEQUES.

General

Summary

Every person who was a party to a negotiable instrument before it reached the current holder in due course remains responsible for paying on that instrument to that holder. This responsibility continues until the instrument has been properly paid or otherwise fulfilled. In simple terms, if you signed or transferred the instrument earlier, you can still be held liable to the person who later holds it in good faith, unless the instrument has already been fully settled.

Official Text

Every prior party to a negotiable instrument is liable thereon to a holder in due course until the instrument is duly satisfied.