§ SECTION 123 · BSA 2023 · CHAPTER VIII — ESTOPPEL

Estoppel of acceptor of bill of exchange, bailee or licensee

Two more specific estoppels — each with an escape hatch. An acceptor of a bill may not deny the drawer’s authority to draw or endorse it; a bailee or licensee may not deny that his bailor or licensor had authority when the bailment or licence began. But two Explanations keep genuine defences open.

How to read Section 123

Accept a bill, or take goods/premises by bailment or licence, and you cannot deny the other’s authority at the start — but real defences survive.

Acceptor’s bar

No acceptor of a bill of exchange may deny that the drawer had authority to draw the bill or to endorse it.

Bailee / licensee’s bar

No bailee or licensee may deny that his bailor or licensor had authority when the bailment or licence commenced.

The escape hatches

Two Explanations keep genuine defences open — a forged drawing, and a third party’s better right to bailed goods.

The bare Act

The section in its own words — two limbs, and two Explanations that carve out real defences.

Section 123 · verbatim

Acceptor. No acceptor of a bill of exchange shall be permitted to deny that the drawer had authority to draw such bill or to endorse it;

Bailee / licensee. nor shall any bailee or licensee be permitted to deny that his bailor or licensor had, at the time when the bailment or licence commenced, authority to make such bailment or grant such licence.

Explanation 1.—The acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.

Explanation 2.—If a bailee delivers the goods bailed to a person other than the bailor, he may prove that such person had a right to them as against the bailor.

In short: once you accept a bill, or take goods or premises as a bailee or licensee, you have acted on the faith of the other side’s authority — so you cannot later deny it. An acceptor may not deny that the drawer had authority to draw or endorse the bill; a bailee or licensee may not deny that his bailor or licensor had authority to make the bailment or grant the licence, at the time it commenced. But the estoppel is not a licence to enforce a fraud, so two Explanations preserve honest defences: the acceptor may still say the bill was never really drawn by the person it appears to come from (a forgery); and a bailee who has handed the goods to someone other than the bailor may prove that that person had a better right to them than the bailor. The bar fixes only the authority at the start — it does not compel a party to honour a forged instrument or a superior claim.

→ This carries forward IEA 1872 § 117 — the estoppels of acceptor, bailee and licensee.

Glossary

acceptor of a bill of exchange

The person who agrees to pay the bill when it falls due.

drawer

The person who makes (draws) the bill, ordering the payment.

authority to draw or endorse

The drawer’s power to create the bill or transfer it by endorsement.

bailee

One to whom goods are delivered for a purpose (safekeeping, carriage), to be returned or dealt with as directed.

bailor / licensor

The person who hands over the goods (bailor) or grants the licence (licensor).

the Explanations

Carve-outs: the acceptor may still allege forgery; a bailee who delivered goods to a third party may prove that party’s better right.

The picture

You accepted the bill, or took the goods, on the faith of their authority — you cannot deny it, but honest defences survive.

The section, part by part

Tap a part — the picture-story tells it first; the word-by-word text and example follow.

Acceptor of a billBailee or licensee

acceptorAccept a bill and you admit the drawer’s authority — but forgery is still open

In one lineAn acceptor cannot deny that the drawer had authority to draw or endorse the bill; but (Explanation 1) he may still deny that the bill was really drawn by that person.

No acceptor of a bill of exchange shall be permitted to denyby accepting, you are bound…the acceptor has undertaken to pay on the faith of the bill…

that the drawer had authority to draw such bill or to endorse it;→ so cannot deny the drawer’s authority…so may not deny that the drawer had authority to draw the bill or to endorse it.

Explanation 1.—The acceptor of a bill of exchange may deny that the bill was really drawn by the person by whom it purports to have been drawn.escape: forgery stays openhe may still deny that the bill was really drawn by the person it purports to come from.

ExampleX accepts a bill appearing to be drawn by D. X cannot defend by saying D had no authority to draw it. But if the drawing is a forgery — D never signed — X may prove that, and escape.

✗ Not thisAcceptance admits the drawer’s authority, not the genuineness of his signature. The estoppel does not force the acceptor to pay on a bill the drawer never actually made.

bailee / licenseeTake the goods and you admit the bailor’s authority — but a better right survives

In one lineA bailee or licensee cannot deny that his bailor or licensor had authority when it commenced; but (Explanation 2) a bailee who gives the goods to a third party may prove that party’s better right.

nor shall any bailee or licensee be permitted to denyby taking the bailment/licence, you are bound…the bailee or licensee accepted the goods or entry on the faith of the other’s authority…

that his bailor or licensor had, at the time when the bailment or licence commenced, authority to make such bailment or grant such licence.→ cannot deny that authority at the start…so may not deny that his bailor or licensor had authority to make the bailment or grant the licence when it commenced.

Explanation 2.—If a bailee delivers the goods bailed to a person other than the bailor, he may prove that such person had a right to them as against the bailor.escape: a third party’s better righta bailee who has delivered the goods to someone other than the bailor may prove that person had a right to them as against the bailor.

ExampleC stores goods for B (bailor). C cannot resist B’s claim by saying B had no authority to bail them. But if C has already handed the goods to T, the true owner, C may prove that T’s right beats B’s (Explanation 2).

✗ Not thisThe bailee is not forced to hand goods to a bailor who was never entitled, once a superior title is shown. The estoppel fixes authority at the start — it does not defeat a true owner’s claim.

Connected provisions

§ 122 · back

IEA 1872, § 117

Carried forward — the estoppels of acceptor, bailee and licensee, with both Explanations.

BSA 2023 § 123 — Estoppel of acceptor of bill of exchange, bailee or licensee