Negotiable Instruments Act Section 80 — Interest when no rate specified

CHAPTER VI OF PAYMENTAND INTEREST

General

Summary

If a promissory note or other negotiable instrument does not state an interest rate, the amount owed will automatically carry interest at 18% per year. This interest runs from the date the payment was due until the money is actually paid or collected, or until a court sets a different date after a lawsuit is filed. This applies even if the parties had a separate agreement about interest. If the person who must pay is an endorser of a dishonoured instrument, they only owe interest from the time they were told about the dishonour.

Official Text

When no rate of interest is specified in the instrument, interest on the amount due thereon shall, 1[notwithstanding any agreement relating to interest between any parties to the instrument], be calculated at the rate of 2[eighteen per centum] per annum, from the date at which the same ought to have been paid by the party charged, until tender or realization of the amount due thereon, or until such date after the institution of a suit to recover such a mount as the Court directs.

Explanation.—When the party charged is the indorser of an instrument dishonoured by non-payment, he is liable to pay interest only from the time that he receives notice of the dishonour.