Negotiable Instruments Act Section 38 — Prior party a principal in respect of each subsequent party

CHAPTER III PARTIES TO NOTES, BILLS AND CHEQUES.

General

Summary

When several people are liable on the same negotiable instrument, each earlier party is treated as the main debtor (the person primarily responsible) toward every later party, unless they have agreed otherwise. This means that, without a special contract, the earlier party cannot claim to be only a backup or guarantor when dealing with a later party.

Official Text

As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, also liable thereon as a principal debtor in respect of each subsequent party.