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ACTION ON BILLS OF EXCHANGE, CHEQUES, AND PROMISSORY NOTES.

The law as to bills of exchange, cheques, and promissory notes has now been codified by the Bills of Exchange Act, 1882,* 45 & 46 Vict. c.61. The several sections of this act therefore now replace a large number of the decisions on these instruments, which were collected in previous editions of this work. The act, in Part II. enacts in detail the law, so far as relates to bills of exchange, and in Parts III. and IV., respectively enacts that relating to cheques and promissory notes: this is done to a great extent by reference to Part II., and this scheme is accordingly adopted in the following pages. The following sections are general in their application :Sect. 2. "In this Act, unless the context otherwise requires,"

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Acceptance means an acceptance completed by delivery or notification." See sect. 21, post, p. 321. Acceptance is defined by sect. 17, post, p. 329, and its requisities are there stated.

"Action includes counter-claim and set-off."

"Banker includes a body of persons, whether incorporated or not, who carry on the business of banking."

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Bankrupt includes any person whose estate is vested in a trustee or assignee under the law for the time being in force relating to bankruptcy." "Bearer means the person in possession of a bill or note which is payable to bearer."

"Bill means bills of exchange. note means promissory note." These instruments respectively are defined by sect. 3, post, p. 319, and sect. 83, post, p. 375.

"Delivery means transfer of possession, actual or constructive, from one person to another." As to delivery, see sect. 21, post, p. 321.

"Holder means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof." A holder in due course is defined by sect. 29, post, p. 322. The rights of holders are defined by sect. 38, post, p. 322. "Indorsement means an indorsement completed by delivery." See sect. 21, post, p. 321. The requisites of an indorsement are stated in sect. 32, post, p. 336.

"Issue means the first delivery,' (vide supra), " of a bill or note, complete in form to a person who takes it as a holder.

"Person includes a body of persons whether incorporated or not.
"Value means valuable consideration." See sect. 27, post, p. 321.
"Written includes printed, and writing includes print.'

By sect. 90. "A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not."

By sect. 91. "(1.) Where, by this Act, any instrument or writing is required to be signed by any person, it is not necessary that he should sign it with his own hand, but it is sufficient if his signature is written thereon by some other person by or under his authority."

"(2.) In the case of a corporation, where, by this Act, any instrument or writing is required to be signed, it is sufficient if the instrument or writing be sealed with the corporate seal.

But nothing in this section shall be construed as requiring the bill or note of a corporation to be under seal."

Sect. 96 repeals numerous statutory enactments relating to bills of exchange, cheques, and notes.

*Cited for brevity as B. of Ex. Act, 1882.

Action on Bills of Exchange.

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By sect. 97(1.) The rules in bankruptcy relating to bills of exchange, promissory notes, and cheques, shall continue to apply thereto notwithstanding anything in this Act contained."

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(2.) The rules of common law including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, shall continue to apply to bills of exchange, promissory notes, and cheques." "(3.) Nothing in this Act or in any repeal effected thereby shall affect(a.) The provisions of the Stamp Act, 1870, or Acts amending it, or any law or enactment for the time being in force relating to the revenue:" vide ante, pp. 224, et seq.

"(b.) The provisions of the Companies Act, 1862, or Acts amending it, or any Act relating to joint stock banks or companies:" vide post, pp. 376, 377, and, Part III., Actions by and against Companies.

"(c.) The provisions of any Act relating to or confirming the privileges of the Bank of England or the Bank of Ireland respectively:

(d.) The validity of any usage relating to dividend warrants, or the indorsements thereof."

When a dividend warrant is payable to the order of two or more persons, it is the usage to pay to the order of one of them: this provision saves this exception from the general rule laid down by sect. 32 (3), post, p. 336.

By sect. 99. "Where any Act or document refers to any enactment repealed by this Act, the Act or document shall be construed, and shall operate, as if it referred to the corresponding provisions of this Act."

As to who is the holder of a bill see Latter v. White, L. R., 5 H. L. 578, post, p. 376.

ACTION ON BILLS OF EXCHANGE.

Statute.] The general sections of the B. of Ex. Acts, 1882, relating to bills of exchange are as follows:

Sect. 3. "(1.) A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.

“(2.) An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange."

"(3.) An order to pay out of a particular fund is not unconditional within the meaning of this section; but an unqualified order to pay, coupled with (a) an indication of a particular fund out of which the drawee is to reimburse himself or a particular account to be debited with the amount, or (b) a statement of the transaction which gives rise to the bill, is unconditional."

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"(4.) A bill is not invalid by reason—

(a.) That it is not dated;

(b.) That it does not specify the value given, or that any value has been given therefor;

(c.) That it does not specify the place where it is drawn or the place

where it is payable.'

See sect. 12, post, p. 320, as to the insertion of the date in an undated bill. Sect. 4. "(1.) An inland bill is a bill which is or on the face of it purports to be (a) both drawn and payable within' the British Islands, or (b) drawn within the British Islands upon some person resident therein. Any other bill is a foreign bill.

For the purposes of this Act 'British Islands' mean any part of the

United Kingdom of Great Britain and Ireland, the islands of Man, Guernsey, Jersey, Alderney, and Sark, and the islands adjacent to any of them being part of the dominions of Her Majesty."

"(2.) Unless the contrary appear on the face of the bill the holder may treat it as an inland bill." This subsection is new.

By sect. 97. (3, a.), ante, p. 319, nothing in this act affects the Stamp Acts. Sect. 5. "(1.) A bill may be drawn payable to, or to the order of, the drawer; or it may be drawn payable to, or to the order of, the drawee." Sect. 6. "(1.) The drawee must be named or otherwise indicated in a bill with reasonable certainty."

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(2.) A bill may be addressed to two or more drawees whether they are partners or not, but an order addressed to two drawees in the alternative or to two or more drawees in succession is not a bill of exchange."

Sect. 7. "(1.) Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty."

"(2.) A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees. A bill may also be made payable to the holder of an office for the time being." The provision in italics is new; vide post, p. 377.

Sect. 9. "(1.) The sum payable by a bill is a sum certain within the meaning of this Act, although it is required to be paid

(a.) With interest.

(b.) By stated instalments.

(c.) By stated instalments, with a provision that upon default in payment of any instalment the whole shall become due.

(d.) According to an indicated rate of exchange or according to a rate of exchange to be ascertained as directed by the bill."

"(3.) Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, interest runs from the date of the bill, and if the bill is undated from the issue thereof."

As to damages on the dishonour of a bill, see sect. 57, post, p. 359.
Sect. 10. (1.) A bill is payable on demand-

(a.) Which is expressed to be payable on demand, or at sight, or on
presentation;" replacing 34 & 35 Vict. c. 74; or

(b.) In which no time for payment is expressed."

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"(2.) Where a bill is accepted or indorsed when it is overdue, it shall, as regards the acceptor who so accepts, or any indorser who so indorses it, be deemed a bill payable on demand.”

Sect. 11. "A bill is payable at a determinable future time within the meaning of this Act which is expressed to be payable—

(1.) At a fixed period after date or sight.""

As to fixing the due date, see sect. 14 (2), (3), post, pp. 328, 329, and sect. 65 (5), post, p. 356.

"(2.) On or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening may be uncertain.

An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect.'

Sect. 12. "Where a bill expressed to be payable at a fixed period after date is issued undated, or where the acceptance of a bill payable at a fixed period after sight is undated, any holder may insert therein the true date of issue or acceptance, and the bill shall be payable accordingly.

Provided that (1) where the holder in good faith and by mistake inserts a wrong date, and (2) in every case where a wrong date is inserted, if the bill subsequently comes into the hands of a holder in due course the bill shall not be avoided thereby, but shall operate and be payable as if the date so inserted had been the true date."

Bills of Exchange Act, 1882.

321 As to the insertion of other material particulars omitted, vide, s. 20 infra.

Sect. 13. "(1.) Where a bill or an acceptance or any indorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance, or indorsement, as the case may be." "(2.) A bill is not invalid by reason only that it is ante-dated or post dated, or that it bears date on a Sunday."

Sect. 20. " (1.) Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor, or an indorser; and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a primâ facie authority to fill up the omission in any way he thinks fit."

"(2.) In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Reasonable time for this purpose is a question of fact.

Provided that if any such instrument after completion is negotiated to a holder in due course" (vide sect. 29, post, p. 322) "it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given.'

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Sect. 21. "(1.) Every contract on a bill, whether it be the drawer's, the acceptor's, or an indorser's, is incomplete and revocable, until delivery (vide sect. 2, ante, p. 318) " of the instrument in order to give effect thereto. Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable."

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"(2.) As between immediate parties, and as regards a remote party other than a holder in due course," (vide sect. 29, post, p. 322) "the delivery(a.) in order to be effectual must be made either by or under the authority of the party drawing, accepting, or indorsing, as the (b.) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill. But if the bill be in the hands of a holder in due course" (vide sect. 29, post, p. 322) "a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed."

"(3.) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved."

Sect. 22. "(1.) Capacity to incur liability as a party to a bill is co-extensive with capacity to contract.

Provided that nothing in this section shall enable a corporation to make itself liable as drawer, acceptor, or indorser of a bill unless it is competent to it so to do under the law for the time being in force relating to corporations." By sect. 91 (2), ante, p. 318, the seal of a corporation on a bill is equivalent to signature.

"(2.) Where a bill is drawn or indorsed by an infant, minor, or corporation having no capacity or power to incur liability on a bill, the drawing or indorsement entitles the holder to receive payment of the bill, and to enforce it against any other party thereto."

By Sect. 27. "(1.) Valuable consideration for a bill may be constituted by,

(a.) Any consideration sufficient to support a simple contract;

(b.) An antecedent debt or liability. Such a debt or liability is deemed

VOL. I.

Y

valuable consideration whether the bill is payable on demand or at a future time."

"(2.) Where value has at any time been given for a bill the holder" (vide sect. 2, ante, p. 318), "is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to such time."

(3.) Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien."

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Sect. 29. (1.) A holder in due course is a holder" (see sect. 2, ante, p. 318) "who has taken a bill, complete and regular on the face of it, under the following conditions; namely,

(a.) That he became the holder of it before it was overdue" (vide sect. 14, post, p. 328) "and without notice that it had been previously dishonoured, if such was the fact:

(b.) That he took the bill in good faith" (vide sect. 90, ante, p. 318), " and for value" (vide sect. 27, supra), "and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it."

"(2.) In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud."

"(3.) A holder (whether for value or not), who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder."

It will be seen that this section substitutes the term "holder in due course," for "bona fide holder for value without notice." The rights of a holder in due course are defined by sect. 38, infra. Defect of title is used in this Act as equivalent to "equity attaching to the bill." "Force and fear" is the equivalent in the Scottish dialect for duress. The effect of taking a bill overdue or dishonoured is defined by sect. 36 (2, 5), post, p. 360. By Sect. 30, (1.) Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value."

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(2.) Every holder of a bill is prima facie deemed to be a holder in due course," (vide supra); "but if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is affected with fraud, duress, or force and fear, or illegality, the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill."

Sect. 37. "Where a bill is negotiated back to the drawer, or to a prior indorser or to the acceptor, such party may, subject to the provisions of this Act," (vide sect. 59 (3), post, p. 367, and sect. 61,post, p. 369) “re-issue and further negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable."

Sect. 38. "The rights and powers of the holder" (vide sect. 2, ante, p. 318) "of a bill are as follows:

(1.) He may sue on the bill in his own name :

(2.) Where he is a holder in due course," (vide sect. 29, supra) "he holds the bill free from any defect of title" (vide supra)" of prior parties, as well as from mere personal defences available to prior parties among themselves, and may enforce payment against all parties liable on the bill:

(3.) Where his title is defective (a) if he negotiates the bill to a holder in due course, that holder obtains a good and complete title to the bill

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