If the holder of the negotiable paper has presented the same for payment, and it has been dishonored, the duty is then on the holder to give notice of the dishonor to those who are secondarily liable on the paper, that is to the drawer and indorser of a bill and the indorsers of a note. A failure to give this notice will discharge the drawer or the indorser as the case may be. Persons secondarily liable on the paper are entitled to this notice at once, in order that they may take steps towards protecting their own interests in the premises.18 But the principal reason for the rule is the condition that the rule of the Law Merchant itself imposed, namely, a compliance with the conditions precedent of presentment and notice in order to bind the indorser or the person whose liability is secondary.19

The holder's failure to give this notice of the non-payment of the bill or note fails then to perform the condition precedent to his right to recover; he cannot, therefore, bring suit against those who become parties to the paper, relying on the right of performance of these conditions precedent. It is, therefore, the rule that the drawer or indorser who has not been sent the notice of dishonor may not only claim a discharge on his liability on the note, but also on the liability upon the consideration of the transfer of the paper.20