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Technically, it's a substitution of collateral
Two common situation:
With regards to bonds:
The issuer places government backed securities in escrow, sufficient enough to repay all interest and principal on the initial bonds. The bond buyers are issued a notice of defeasance informing them that their bonds are now backed by the securities in escrow. This releases the issuer from any further obligation.
With regards to mortgages
The mortagage borrower replaces the original collateral (the home) with some other collateral. The bank then receives a notice of defeasance informing them that their original loan is now secured with something else, allowing the lender to do what he wants with the house
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Notice of dishonor is necessary - (a) when it is dispensed with by the party entitled thereto (b) in order to charge the drawer, when he has countermanded payment (c) when the party charged could not suffer damage for want of notice (d) when the party entitled to notice cannot after due search be found, or the party bound to give notice is, for any other reason, unable without any fault of his own to give it. (e) to charge the drawers, when the acceptors is also a drawer. (f) in the case of a promissory note which is not negotiable. (g) when the party entitled to notice, knowing the facts, promise unconditionally to pay the amount due on the instrument.
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Take off your top.
