Question

Which provision of the Negotiable Instruments Act discusses about material alteration of an instrument and its effects

• A. Section 77
• B. Section 88
• C. Section 87
• D. Section 78

Hint:

For the NI Act, remember that any unauthorized material alteration is fatal to the instrument's validity (Section 87). This protects the integrity of negotiable instruments. However, an alteration made with the consent of the parties or to fulfill their common intention is valid.

Answer 1

The Correct Option is C

Each of these four sections governs a different, specific aspect of negotiable instruments, so the quickest approach is matching topic to number.

1. Section 77: concerns expressing the rate of exchange, unrelated to alteration.
2. Section 88: protects a party who pays on an instrument despite an alteration that wasn't apparent, a related but narrower provision about payment, not the general rule on alteration itself.
3. Section 87: this is the section headed "Effect of material alteration", stating that such an alteration voids the instrument against non-consenting parties, unless it merely reflects the original common intention.
4. Section 78: concerns who should properly receive payment on the instrument, a different topic altogether.

The correct answer is Section 87.

Answer 2

A helpful way to sort these four sections is by asking exactly which stage of an instrument's life each one governs, creation and change, payment, or currency terms.

1. Section 78: governs the payment stage, identifying the proper person to whom payment discharges the instrument, nothing to do with alterations made to its terms.
2. Section 77: governs how currency exchange rates are stated on a bill, a drafting formality unrelated to later tampering with the instrument.
3. Section 88: governs a narrower situation, protecting someone who innocently pays on an instrument that was altered without their knowledge, it assumes material alteration has already happened and deals with one consequence of it.
4. Section 87: governs the core question itself, what counts as a material alteration and what happens to the instrument generally once one is made without consent, voiding it as against parties who didn't agree to the change, unless the change only reflects what everyone originally intended.

Since the question asks about material alteration and its effects generally, not the narrower payment-protection scenario, the correct provision is Section 87.