Material alteration

Material alteration
Primary topic
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Methods and techniques

Material alternation is "an alternation which alters the busieness effect of the instrument if used for any busienss purpose. Any change made in the instrument that couses it to speak a different language from what is originally intended, or which changes the legal indetity of the instrument in its terms or in relation of parties thereto is a material alternation." (S.S. Gulshan 2009, p. 305)

According to M.C. Kuchhal and V. Kuchhal if material alteration is done by mutual consent, the original contract is discharged by alternation and the new one is altered form and takes the original's place. A material alteration is one which change the legal effect of the agreement e.g. a modification in amount of money of payment or a change in a rate of interest. What is important, a material alterantion made in written form by one party without the permission of the other, willl make the whole agreement void and nobody can maintain an action upon it. It comes under dischared of a contract by operation of law (2014, p. 56).

Financial aspect[edit]

A material alternation makes a significant change in the mandate given in the cheque. If the addition, deletion or alternation does not affect the drawer's mandate or the legal position of the sides materially or significantlly it can not be called a material alternation (M. Sukhvinder 2012, p. 580). Following alternations can not be treated as a material ones (M. Sukhvinder 2012, p. 580):

  • crossing out an open cheque by holder,
  • conversation of an endrosement in blank into fully endorsement,
  • converstion of a general crossing into a special crossing,
  • conversation of bearer to order,
  • an alternation made with the consent of all sides,
  • alternation made to cary out the mutual intention of the original parties,
  • completing an undeveloped instrument,
  • addition or words which are not negotiable to a crossed cheque

Effect of material alternation[edit]

"Material alternation of negotiable instrument discharges all parties who are liable on the instrument at the time of the alternation and who do not consent to such alternation. However an alternation does not in any way affect the liability of person becoming parties subsequent to the alternation." (G. Mehta 2010, 666-667) An alternation can be called material only if it is affected by the will of the person by whom or under whose direction it is made. That is why the alternation wchich is the result of an accident does not render the document void (M. Sukhvinder 2012, p. 580).

Examples[edit]

The examples of material alternations are (M.C. Kuchhal, V. Kuchhal 2014, p. 214):

  • any alternation of the date, sum, time or place of payment,
  • alternation consisting in addition of a new parties to the instrument,
  • alternation of the rate of interest,
  • breaking off the material part of the instrumnet

References[edit]

Author: Dominika Kuraś