The correct answer is: B. all parties liable under instrument.
Notice of dishonour is a formal notice given by the holder of a bill of exchange to the drawer and all indorsers of the bill, informing them that the bill has been dishonoured by the drawee. The purpose of notice of dishonour is to give the parties liable on the bill an opportunity to take steps to protect their interests.
Notice of dishonour must be given within a reasonable time after the bill is dishonoured. The time period for giving notice of dishonour is usually specified in the bill itself. If no time period is specified, then notice of dishonour must be given within a reasonable time.
Notice of dishonour can be given in any form, but it is usually given in writing. The notice must state the date and place of dishonour, the reason for dishonour, and the amount of the bill.
If notice of dishonour is not given, then the parties liable on the bill may be discharged from their liability. This means that they may not be required to pay the amount of the bill.
The following are the parties liable under a bill of exchange:
- The drawer is the person who signs the bill and orders the drawee to pay the amount of the bill to the payee.
- The drawee is the person who is ordered to pay the amount of the bill.
- The payee is the person to whom the amount of the bill is payable.
- The indorser is a person who signs the bill after it has been drawn. The indorser becomes liable on the bill if the drawee fails to pay the amount of the bill.
Therefore, notice of dishonour must be given to all parties liable under the instrument.