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Bills of Exchange

(a) It must be written on the bill, and be signed by the
drawee. The mere signature of the drawee with-
out 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.

19. A bill may be accepted

(1) Before it has been signed by the drawer or while otherwise

(2) When it is overdue, or after it has been dishonoured by a
previous refusal to accept or by non-payment.

(3) 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.

20. (1) An acceptance is either (a) general or (b) qualified.

Time for accept


General and qualified accept

(2) A general acceptance assents without qualification to the ances order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn.

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 con-
dition therein stated:-

(b) partial; that is to say, an acceptance to pay part only
of the amount for which the bill is drawn :

(c) local; that is to say, an acceptance to pay only at a
particular specified place.

An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only and not elsewhere:

(d) qualified as to time:

(e) the acceptance of some one or more of the drawees,
but not of all.


21. (1) Where a simple signature, on a blank stamped paper, is Inchoate instrudelivered 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 prima 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, it shall be valid and effectual for all



Capacity of parties

Signature essential to liability

Forged or unauthorised signature

Bills of Exchange

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.

22. (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 :

(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 drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved.


23. (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.

(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.

24. No person is liable as drawer, indorser, or acceptor of a bill who has not signed it as such: Provided that

(1) Where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed it in his own


(2) 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.

25. Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorised signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party

Bills of Exchange

thereto can be acquired through or under that signature unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority.

Provided that nothing in this section shall affect the ratification

of an unauthorised signature not amounting to a forgery.

26. A signature by procuration operates as notice that the agent Procuration has but a limited authority to sign, and the principal is only bound by signatures such signature if the agent in so signing was acting within the actual limits of his authority.

27. (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.

(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.


28. (1) Valuable consideration for a bill may be constituted by-
(a) Any consideration sufficient to support a simple

(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.

Person signing

as agent or in representative


Value and holder for value

29. (1) An accommodation party to a bill is a person who has Accommodation signed a bill as drawer, acceptor, or indorser without receiving value bill or party therefor, and for the purpose of lending his name to some other


(2) An accommodation party is liable on the bill to a holder for value, and it is immaterial whether, when such holder took the

bill, he knew such party to be an accommodation party or not.

30. (1) A holder in due course is a holder who has taken a bill, Holder in due complete and regular on the face of it under the following conditions,


(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:

(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.


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Bills of Exchange

(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.

31. (1) Every party whose signature appears on a bill is primá facie deemed to have become a party thereto for value.

(2) Every holder of a bill is prima facie deemed to be a holder in due course; 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.


32. (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.

(2) A bill payable to bearer is negotiated by delivery.

(8) A bill payable to order is negotiated by the indorsement of the holder completed by delivery.

(4) Where the holder of a bill payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the bill, and the transferee in addition acquires the right to have the indorsement of the transferor.

(5) Where any person is under obligation to indorse a bill in a representative capacity, he may indorse the bill in such terms as to negative personal liability.

33. An indorsement in order to operate as a negotiation must comply with the following conditions, namely—

(1) It must be written on the bill itself and be signed by the indorser. The simple signature of the indorser

on the bill, without additional words, is sufficient.

An indorsement written on an allonge, or on a

" copy' of

a bill issued or negotiated in a country where 'copies' are recognised, is deemed to be written on the bill itself.

(2) It must be an indorsement of the entire bill. A partial indorsement, that is to say, an indorsement which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the bill to two or more indorsees severally, does not operate as a negotiation of the bill.

Bills of Exchange

(3) Where a bill is payable to the order of two or more
payees or indorsees who are not partners all must
indorse, unless the one indorsing has authority to indorse
for the others.

(4) Where, in a bill payable to order, the payee or indorsee
is wrongly designated, or his name is mis-spelt, he
may indorse the bill as therein described, adding, if he
think fit, his proper signature.

(5) Where there are two or more indorsements on a bill,
each indorsement is deemed to have been made in
the order in which it appears on the bill until the
contrary is proved.

(6) An indorsement may be made in blank or special. It may
also contain terms making it restrictive.


34. Where a bill purports to be indorsed conditionally, the condi- Conditional tion may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not.

35. (1) An indorsement in blank specifies no indorsee, and a bill Indorsement in so indorsed becomes payable to bearer.

(2) A special indorsement specifies the person to whom, or to whose order, the bill is to be payable.

(3) The provisions of this Act relating to a payee apply, with the necessary modifications, to an indorsee under a special indorsement.

(4) When a bill has been indorsed in blank, any holder may convert the blank indorsement into a special indorsement by writing above the indorser's signature a direction to pay the bill to or to the order of himself or some other person.


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blank and special indorsement


36. (1) An indorsement is restrictive which prohibits the further Restrictive in negotiation of the bill, or which expresses that it is a mere authority to deal with the bill as thereby directed and not a transfer of the ownership thereof; as, for example, if a bill be endorsed Pay D. only,' or 'Pay D. for the account of X.,' or Pay D. or order for collection.' (2) A restrictive indorsement gives the indorsee the right to receive payment of the bill and to sue any party thereto that his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorise him to do so.

(8) Where a restrictive indorsement authorises further transfer, all subsequent indorsees take the bill with the same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement.

37. (1) Where a bill is negotiable in its origin, it continues to be negotiable until it has been (a) restrictively indorsed, or (b) discharged by payment or otherwise.

(2) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had.

(3) A bill, payable on demand, is deemed to be overdue within the meaning and for the purposes of this section when it appears on

Negotiation of honoured bill

overdue or dis

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