{"id":457,"date":"2021-06-06T22:52:29","date_gmt":"2021-06-06T22:52:29","guid":{"rendered":"http:\/\/legalblog.ie\/?p=457"},"modified":"2021-06-06T22:52:29","modified_gmt":"2021-06-06T22:52:29","slug":"bills-of-exchange","status":"publish","type":"post","link":"https:\/\/legalblog.ie\/bills-of-exchange\/","title":{"rendered":"Bills of Exchange"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_63 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Bills_of_Exchange\" title=\"Bills of Exchange\">Bills of Exchange<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Basic_Requirements\" title=\"Basic Requirements\">Basic Requirements<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Parties\" title=\"Parties\">Parties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Contents_of_Bill\" title=\"Contents of Bill\">Contents of Bill<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Assignment_and_Negotiation\" title=\"Assignment\u00a0 and Negotiation\">Assignment\u00a0 and Negotiation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Holder_and_Holder_for_Value\" title=\"Holder and Holder for Value\">Holder and Holder for Value<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/legalblog.ie\/bills-of-exchange\/#Holder_in_Due_Course\" title=\"Holder in Due Course\">Holder in Due Course<\/a><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Bills_of_Exchange\"><\/span>Bills of Exchange<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Bills of exchange have been recognised in international commercial practice for many hundreds of years.\u00a0 The Bill of Exchange Act codified the existing bill of exchange legislation.\u00a0 In this respect, the legislation is similar to the Partnership Act and the Sale of Goods Act, which were enacted in the same era.<\/p>\n<p>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 money to or to the order of that person or to the bearer.\u00a0 An instrument which doe not comply with any these conditions is not a bill of exchange. It may nonetheless be a negotiable instrument.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Basic_Requirements\"><\/span>Basic Requirements<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>There must be an order in writing. \u00a0It must be for payment of money, whether in domestic or foreign currency.\u00a0 It may not be for goods, stock or even monies worth.\u00a0 The order may not be for payment out of a particular fund.\u00a0 It must be based payable out of the drawer\u2019s entire assets. \u00a0It must be unconditional. \u00a0The time for payment must be certain or capable of being ascertained.<\/p>\n<p>The payee may be named.\u00a0 Alternatively, it may be paid to bearer.\u00a0 If the payee is not named, he must be capable of being identified with reasonable certainty. \u00a0The obligation must be complete. \u00a0It must not be dependent on obligations in another document.\u00a0 Another document may be referred to, but not in terms of the actual obligation.<\/p>\n<p>An incomplete bill may not necessarily be invalid. \u00a0The holder may have authority to insert certain incomplete parts, such as the payee or a blank date.\u00a0 However, this principle will not apply to an alteration of a material part. For example, the holder of an unsigned bill would not have the power to sign it, in the normal course.<\/p>\n<p>It appears that a bill must be in writing and may not be in electronic form.\u00a0 The Electronic Commerce Act does not appear to be applicable, notwithstanding the breadth of its wording.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Parties\"><\/span>Parties<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The person who draws the bill is the drawer.\u00a0 He directs the intended drawee (payer), to make payment at the required time.\u00a0 The bill is drawn on the \u00a0drawee.\u00a0 The person in whose favour the bill is drawn, is the payee. Strictly speaking, the drawer and the drawee cannot be the same person.\u00a0 The holder may however treat the document as a promissory note. The payee becomes the first holder of the instrument. \u00a0A bill is issued when it is completed drawn and delivered to a holder.<\/p>\n<p>The drawee does not become liable on the bill unless and until he accepts it. He accepts it by signing the bill.\u00a0 The bill must be presented to the drawee for acceptance. By signing acceptance, the drawee undertakes to pay the bill on maturity in accordance with its terms. If the drawee refuses to accept the bill, it is dishonoured by non-acceptance. \u00a0The payee then has an immediate right to take legal action against the drawer, notwithstanding that the bill has not yet matured.<\/p>\n<p>Where the bill is payable on demand, the drawee must pay it on presentation.\u00a0 If he refuses to do so, it is dishonoured by non-payment. Once again, the drawee is not personally liable to the payee. He may be liable for breach of contract or defamation to the drawer, if he wrongfully refuses to accept a bill in breach of any separate arrangement with him. A bill may be payable a certain period after \u201csight\u201d.\u00a0 In this case, sight means acceptance. A demand bill is one payable on sight or on presentation.\u00a0 If no period for payment is specified, it is payable on demand.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Contents_of_Bill\"><\/span>Contents of Bill<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The place of drawing of a bill is customarily indicated in the top right corner.\u00a0 This will show the provenance of the bill.\u00a0 The amount stated in the bill is its face value; the amount payable. It must be stated in domestic or foreign currency.\u00a0 It must be for a sum certain, \u00a0or which can be ascertained. The sum may be payable with interest.\u00a0 It may be payable by instalments.\u00a0 It may be payable at a stated rate of exchange or a rate of exchange to be ascertained.<\/p>\n<p>A bill is not invalidated by the absence of a date.\u00a0 This may be deduced from the circumstances.<\/p>\n<p>The time for payment may be inserted.\u00a0 The bill may be payable on demand, or at a definite or determinable date in the future.\u00a0 The date must be fixed.\u00a0 A requirement to pay by a particular date, does not qualify.\u00a0 Similarly, a bill payable on some extraneous event or contingency is not \u00a0a bill of exchange under the legislation. The bill may be expressed to be presentable for acceptance at a particular location.\u00a0 This is not an essential requirement, but can be made a requirement.<\/p>\n<p>The signature of the drawer is essential.\u00a0 A forged bill does not bind the party whose \u00a0signature is forged.\u00a0 However, if it is later endorsed, a holder in due course may hold prior endorsers, after the forged signature liable. A bill may be signed by an agent.\u00a0 However, the signatory will be personally liable, unless the agency is made explicit.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Assignment_and_Negotiation\"><\/span>Assignment\u00a0 and Negotiation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A bill may be sold, prior to maturity, at a discount.\u00a0 If the bill has been accepted by a creditworthy counterparty, it may be transferred or sold to a third party to aid cash flow. The sale will be usually made at a discount, which reflects an implicit interest rate in the time value of money, between the transfer and the ultimate date of payment by the drawer.<\/p>\n<p>A bill may be assigned in the same manner as any chose in action.\u00a0 However, as is the case generally, the assignment will be subject to any rights as between the original parties. Negotiation is a special procedure (which differs from assignment) which makes the transferee, the holder of the bill, free from equities and rights to which it will be subject on a mere assignment.<\/p>\n<p>If the bill is payable to the bearer, it may be negotiated by delivery without endorsement. In this case, the bill is payable to whoever presents this at maturity.\u00a0 Provided the person who the drawee has acts in good faith and is no notice of the effect, he is fully discharged even if the person to whom he pays, does not have lawful possession of this..<\/p>\n<p>Most commonly, a bill is payable to a named payee or his order.\u00a0 This means the payment must be paid to that person or to a person to whom he negotiates the bill.\u00a0 Strictly speaking, the word \u201cor order\u201d\u00a0 are unnecessary, as the legislation implies the right to transfer the bill.<\/p>\n<p>Endorsement takes place by signing the back and delivering the bill.\u00a0 The endorser will usually write \u201cpay [the endorsee]\u201d.\u00a0 This is a special endorsement.\u00a0 Where the endorser signs the back of the bill in blank, it effectually becomes a bearer bill.\u00a0 It is then transferable by delivery. It may be reconverted into a ordinary order bill, by inserting a name. By endorsement, the bill becomes payable to the named person or to his subsequent endorsee.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Holder_and_Holder_for_Value\"><\/span>Holder and Holder for Value<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The holder of a bill may enforce it.\u00a0 The holder is payee or endorsee of a bill or the person \u00a0in possession of a bearer bill. A bearer is a person in possession of a bill which is payable to the bearer. A transfer by the holder gives title. In order to qualify as a holder, the person must in possession of the bill, and complete any applicable requirements in relation to transfer.\u00a0 The holder should hold the bill in accordance with its terms.<\/p>\n<p>There are a number of categories of holder. A holder of a bill who has not given value, has fewer rights than those of a holder for value or a holder for value in due course. He may negotiate the bill.\u00a0 He may complete an omitted date.\u00a0 He may convert the bill into a bearer bill. by endorsement in blank.<\/p>\n<p>The holder for value is a person who holds the bill, having given consideration sufficient to found a contract or undertaken liability for a prior debt (notwithstanding that it is past consideration). A holder is presumed to have given value.\u00a0 However, where it is shown that he has not in fact given value, he will not have this status.<\/p>\n<p>A signatory of a bill is presumed to \u00a0be a party for value.\u00a0 If value was given at any time in the past, the holder is deemed to have given value relative to the acceptor and parties who became parties prior to that time. Provided some person has given value between the holder and the person against whom enforcement is sought, he will be a holder for value.<\/p>\n<p>A holder who has not given value may not enforce.\u00a0 Therefore if a person draws the bill on another who accepts it for no consideration, the former cannot sue the latter.\u00a0 Similarly if a bill given for value is endorsed by way of a gift, \u00a0the donee may not sue the donor. However, the donee may sue any drawee who has accepted it.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Holder_in_Due_Course\"><\/span>Holder in Due Course<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A holder in due course is a bona fide purchaser, without notice of any defects in the title to the bill.\u00a0 Such a party may take a better title than his transferor.\u00a0 This status is a critical aspect of negotiable instruments. The holder in due course is not affected by the fact that a predecessor may have been a thief or have obtained the bill fraudulently or illegally.\u00a0 The fact that the predecessor did not give consideration or breached contract is irrelevant.<\/p>\n<p>The holder in due course is one who takes the bill complete and regular on its face.\u00a0 He must become holder before the bill was overdue and without notice of having previously dishonoured \u00a0(if this is the case). He must take the bill in good faith and for value. He must have no notice of a defect in the title of the person who negotiates it to him.<\/p>\n<p>A bill will not be complete and regular if any material particulars are omitted.\u00a0 The completion of the details under an implied right to complete the instrument, will not fulfil the condition. The date and place are material parts.\u00a0 The fact that that the bill has not yet been accepted, does not make it irregular.<\/p>\n<p>There must be nothing with the circumstances which causes suspicion or casts doubt on the bill.\u00a0 If there are any apparent discrepancies or alterations, the condition may not be satisfied. The person must not have notice of a previous dishonour of the bill.\u00a0 Dishonour may be by non-payment or non-acceptance.<\/p>\n<p>The person must act in good faith and honestly.\u00a0 The fact that he may have discovered a defect by greater care, will not cause him to fail this test.\u00a0 However, if he is very careless, \u00a0he may not be held to have acted in good faith.<\/p>\n<p>The holder must have no notice of the affecting the title of the person through whom the bill is negotiated.\u00a0 A defect in title would be one which undermines the basis of the endorser\u2019s title.\u00a0 This may arise from fraud, duress or illegality.\u00a0 It may arise because of the prior holders\u2019 unlawful act.\u00a0 A holder who takes title to a holder in due course and is not partly to the illegality has the right to the holder in due course relative to the acceptor and parties \u00a0holding the bill prior to that holder.<\/p>\n<p>If the signature on the bill is forged or invalid, the holder has no recourse against parties to the bill, prior to the invalid signature.\u00a0 He is not holder as against those parties. This is so, irrespective of notice.<\/p>\n<!--themify_builder_content-->\n<div id=\"themify_builder_content-457\" data-postid=\"457\" class=\"themify_builder_content themify_builder_content-457 themify_builder tf_clear\">\n    <\/div>\n<!--\/themify_builder_content-->\n","protected":false},"excerpt":{"rendered":"<p>Bills of Exchange Bills of exchange have been recognised in international commercial practice for many hundreds of years.\u00a0 The Bill of Exchange Act codified the existing bill of exchange legislation.\u00a0 In this respect, the legislation is similar to the Partnership Act and the Sale of Goods Act, which were enacted in the same era. A [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[42],"tags":[],"_links":{"self":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/457"}],"collection":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/comments?post=457"}],"version-history":[{"count":1,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/457\/revisions"}],"predecessor-version":[{"id":458,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/posts\/457\/revisions\/458"}],"wp:attachment":[{"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/media?parent=457"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/categories?post=457"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/legalblog.ie\/wp-json\/wp\/v2\/tags?post=457"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}