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Summary Bills of Exchange
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Summary study book Goode on Commercial Law of Professor Sir Roy Goode, Ewan Mckendrick - ISBN: 9780141980522, Edition: 1e druk, Year of publication: -
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Bills of Exchange Act 1882S.3 defines a bill of exchange as follows:
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.
An instrument which does not comply with these conditions, or which orders
any act to be done in addition to payment of money, is not a bill of exchange.
Drawer: the person who draws the bill and gives the order to pay.
Drawee: the person upon whom the bill is drawn, and who is ordered to pay.
When the drawee indicates his willingness to pay, he is then called the acceptor. Acceptor is
the person who has accepted the obligation to pay.
Payee: the person identified in the bill as the person to or to whose order the money is to
be paid or if the bill is drawn payable to bearer, and he is in possession of the bill the
‘bearer’.
Bill payable to order is negotiated (transferred) by the indorsement of the
payee completed by delivery. Person endorsing the bill is the endorser and
the person to whom it is indorsed is the ‘indorsee’.
Bill payable to bearer is negotiated by mere delivery.
The payee or an indorsee of a bill who is in possession of it, or the bearer, is
called the holder.
Unconditional: an order to pay ‘provide funds are available’ or out of a particular fund,
would not be a bill.
Writing: the order must be in writing.
Addressed by one person to another: s bill cannot be addressed to the drawer (it would be
an order to oneself) but the holder of a document in this form can treat it either as a bill of
exchange or as a promissory note.
Signed by the person giving it: the drawer must sign the bill personally or though an agent.
If forced or placed in the bill without his authority the signature is wholly inoperative,
although certain estoppels may arise as against the drawer (BEA s24) and against the
acceptor (BEA s54(2)(a) and any indorser (BEA s55(2)(b).
Payable on demand or at a fixed or determinable future time: s.10(1) a bill made payable
‘on demand’, ‘at sight’, ‘on presentation’ or where no time is for payment is expressed, are
all payable ‘on demand’.
Where the bill is not payable on demand S.11: the date of payment must be capable of
being determined through its being payable either: a) at a fixed period after its date or b) at
a fixed period after sight or on or at a fixed period after the occurrence of a specified event
which is certain to happen, the the time of the happening may be uncertain.
- Where the time is not certain from the face of the instrument it will not be treated
as a bill of exchange.
- Claydon v Bradley: a note payable ‘on or before’ a given date does not provide a
fixed period.
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