Acceptance, honour/dishonour - the facts.
BILLS OF EXCHANGE ACT 1909- SECT 8
Bill of exchange defined
(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.
Bill payable on demand
(1)
A bill is payable on demand:
(a)
which is expressed to be payable on demand, or at sight, or on presentation; or
(b)
in which no time for payment is expressed.
Definition and requisites of acceptance
(1)
The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer.
(2)
An acceptance is invalid unless it complies with the following conditions, namely:
(a)
It must be written on the bill and be signed by the drawee. The mere signature of the drawee, without additional words, is sufficient.
(b)
It must not express that the drawee will perform his promise by any other means than the payment of money.
Time for acceptance
(1)
A bill may be accepted:
(a)
before it has been signed by the drawer, or while otherwise incomplete;
(b)
when it is overdue, or after it has been dishonoured by a previous refusal to accept, or by non-payment.
(2)
When a bill payable after sight is dishonoured by non-acceptance and the drawee subsequently accepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of first presentment to the drawee for acceptance.
General and qualified acceptances
(1)
An acceptance is either:
(a)
general; or
(b)
qualified.
(2)
A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn.
(3)
In particular an acceptance is qualified which is:
(a)
conditional, that is to say, which makes payment by the acceptor dependent on the fulfilment of a condition therein stated; or
(b)
partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn; or
(c)
local, that is to say, an acceptance to pay only at a particular specified place; or
(d)
qualified as to time; or
(e)
the acceptance of some one or more of the drawees, but not of all.
Delivery
(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 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.
(2)
As between immediate parties, and as regards a remote party other than a holder in due course, 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 case may be; or
(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, 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 a drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved.
Signature essential to liability
(1)
Subject to this section, a person is not liable as drawer, indorser or acceptor of a bill if he has not signed it as such
(2)
Where a person signs a bill in a trade name or an assumed name, he is liable on the bill as if he had signed it in his own name.
(3)
The signature of the name of a firm is equivalent to the signature, by the person so signing, of the names of all persons liable as partners in that firm.
Person signing as agent or in representative capacity
(1)
Where a person signs a bill as drawer, indorser, or acceptor, and adds words to his signature, indicating that he signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability.
(e.g sign as agent to the strawman.)
(2)
In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted.
Value and holder for value
(1)
Valuable consideration for a bill may be constituted by:
(a)
any consideration sufficient to support a simple contract; or
(b)
an antecedent debt or liability. Such a debt or liability is deemed 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 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.
Holder in due course
(1)
A holder in due course is a holder 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, and without notice that it had been previously dishonoured, if such was the fact; and
(b)
That he took the bill in good faith and for value, 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.
(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.
Negotiation of bill
(1)
A bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill.
Rules as to presentment (i.e presentment, court order, statement, bill, negotiable instrument, fine, etc)for acceptance and excuses for
non-presentment
(1)
A bill is duly presented for acceptance which is presented in accordance with the following rules:
cont...
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Precedent said, "It cannot be done;" experience said, "It is done."
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