remedy on a bill is barred after six years have elapsed from the date on which the bill fell due.

(5) By negotiation to the acceptor at or after maturity. See section 61.

Lost Instruments.

It is provided by the Act that if a bill is lost before it is overdue, the person who was the holder of it may apply to the drawer to give him another bill of the same tenor. He must, however, give security to indemnify the drawer against any claims arising in the event of the original bill being found again. Should the drawer refuse to give such a duplicate bill, he can be compelled to do so. Further, the Court may, in any action or proceedings on the bill, order that the loss shall not be set up provided a satisfactory indemnity be given.

Documentary Bills.

Where a bill has attached to it the bill of lading, invoice, and policy of insurance relating to the goods against which it is drawn, so that they are available in the event of the bill not being honoured, it is termed a Documentary Bill. These documents convey the title to the goods, and, to enable the drawee to obtain the goods which he has purchased, arrangements are made whereby the documents are handed to him against either his acceptance or against his payment of the bill, the method adopted depending on his credit and standing. The bill is generally marked accordingly, i.e., "Documents to be surrendered on Acceptance (or on Payment)," and is known as a "D/A" or "D/P " bill, as the case may be.

The documents are attached to the bill in the first place by the drawer, when he has shipped the relative goods. On presenting his bill to a banker with the documents attached as security, he is enabled to turn it into cash by sale or discount. The banker, who retains the documents as security, collects the bill when due, through his correspondents abroad. As has already been stated, such instruments are of great service to the mercantile community in enabling a vendor to obtain speedy payment for goods sold overseas.

PROMISSORY NOTES

A bill of exchange has three original parties, whereas a promissory note has but two. A promissory note is defined by section 83 of the Act. If it purports on its face to be both made and payable within the British Isles it is an inland note; any other note is a foreign note. An instrument in the form of a

note payable to the maker's order is not a note until indorsed by the maker.

A usual form of promissory note is given on page 334. In the note there given, Clifford Dormer is the maker and Albert Bates the payee. Such an instrument can be indorsed and transferred in the same manner as a bill of exchange.

The maker engages that he will pay the note according to its tenor, and he is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse. A promissory note may be made by two or more makers, and they may be liable jointly, or jointly and severally, according to its tenor. If a note runs "I promise to pay" and is signed by two or more persons it is deemed to be a joint and several note. If the parties are liable jointly, each is liable for his proportionate share. If the parties are liable jointly and severally, any one maker may be called upon to pay the whole amount if his co-makers do not pay their shares. The maker is the person primarily liable on the note, and corresponds to the "acceptor" of a bill of exchange.

In case of default, each of the indorsers can be sued, but not until the note has been presented to the maker for payment and payment has been refused.

If a note is in the body of it made payable at a particular place, it must be presented for payment at that place in order to render the maker or an indorser liable. In other cases, presentment is not necessary in order to render the maker liable; but, to render the indorsers liable, presentment is always

necessary.

A promissory note may, as in the case of a bill of exchange, be payable by instalments, if the instalments are stated. In the case of Schaverien v. Morris (1921), where a promissory note payable by instalments provided that if any instalment was not paid "punctually " the whole balance immediately became due, it was held that the word "punctually "did not deprive the maker of the note of the three days of grace allowed by section 14 of the Act. Protest of a dishonoured foreign note is not necessary, although it may be required for the purpose of charging a foreign maker or indorser in his own country.

Except in this connection, and as regards the provisions respecting" acceptance" and " bills in a set," in relation to bills, the provisions of the Act relating to bills of exchange apply, mutatis mutandis, to promissory notes. Under the Statute of Limitations, if a note is payable by instalments, the period begins to run from the date of default in paying an instalment, if there is a proviso that on default the whole amount of the note shall fall due. In the case of a note payable on demand the Statute

of Limitations runs in favour of the maker from the date of the note, and not from the date of its dishonour. Section 86 (3) of the Act negatives the application to promissory notes of the provisions of section 36 (3) in regard to overdue bills, so that a note payable on demand is hot deemed to be overdue because a reasonable time has elapsed for presenting it for payment.

CHEQUES

Cheques are dealt with by the Bills of Exchange Act, 1882, wherein a cheque is defined as "a bill of exchange drawn on a banker payable on demand," so that the definition previously given of a bill of exchange will apply to cheques; and, except as mentioned hereafter, the provisions of the Act applicable to bills of exchange payable on demand apply equally to cheques. Before considering the matter of cheques, it is advisable to refer to the relation existing between a banker and his customer. (b)

A cheque does not need "acceptance" by the banker, and if he refuses payment he is, therefore, not liable in any way to the holder.

A person receiving a cheque should present it for payment within a reasonable time. If, through delay in presentation, the drawer has been prejudiced, the holder must bear the loss; e.g., if the bank failed and the drawer had therein sufficient funds to meet the amount of the cheque, he is discharged, and the holder must prove for the amount in the winding up of the bank. So if A had drawn a cheque for £100 on his bankers in favour of B, and B omitted to present it for an unreasonable time and the bank meanwhile failed, A would be discharged from further liability to B if he had had in the bank sufficient funds to meet the cheque: B could only prove for the amount of £100 in the winding up of the bank. What is a reasonable time depends on the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. The old common law rules were that if a person who receives the cheque and the banker are in the same place, the cheque should be presented during the next day after it is received. If they are in different places, it should be forwarded for presentment within that time, and the person to whom it is forwarded should present it within the next day after he receives it. (c)

A person who takes a cheque that has been overdue for an unreasonable length of time, takes it subject to any defects in title, but it was decided in London & County Banking Co. v. Groome (1882) that the rule that a bill or note taken after maturity

(b) See ante, p. 88,

(c) BYLES on Bills, pp, 21-23,

is subject to all faults to which it was subject in the transferor's hands does not primarily apply to cheques.

If, in the absence of just cause, (d) the banker should not pay a cheque on presentment when he has sufficient funds of the drawer in hand, he is not liable to the payee or indorsee, but he would be liable in damages to the drawer.

Forgeries.

As previously mentioned, no title can be made through a forgery. If a banker pays a cheque to which the signature of the drawer has been forged, the banker must bear the loss, as he is supposed to know the signatures of his customers. But it was decided in Young v. Grote (1827) that if the customer draws a cheque negligently and leaves spaces which can be utilized for the purpose of fraudulent alteration, then if the cheque is altered the customer must bear the loss. As regards a forged indorsement, however, the rule is different; for the Act specially provides that, if the banker pays a cheque bearing a forged indorsement, in good faith and in the ordinary course of business, he is not liable and the loss falls on the true owner, who may frequently be the customer. This applies to bankers only, and it was laid down in the case of Ogden v. Benas (1874) that a third person who cashes a cheque on which the indorsement is forged is liable to refund to the rightful owner the money he received from the banker when it was honoured. Thus, A draws a cheque in favour of B; C steals it and forges B's signature in indorsing it and cashes it with D, a tradesman; D pays the cheque into his own bank for collection and the cheque is duly honoured by A's banker. On discovery of the forgery, D must refund to A the money he received from A's banker when the cheque was honoured. In Banque Belge pour L'Étranger v. Hambrouck (1921), where a cheque was obtained by fraud and the proceeds thereof transferred without consideration, it was held that the transferee holds no better title than the fraudulent holder had.

But the difference between forgery and fraud in relation to bills must be clearly borne in mind, for forgery is the wrongful signing. of the instrument, whereas fraud may consist of any unauthorized alteration of the instrument, e.g., raising the amount of a cheque.

Crossed Cheques.

Where a cheque bears across its face the words "and Company" or any abbreviation thereof between two parallel transverse lines, or two parallel transverse lines simply, in either case with or without the words "not negotiable," such addition

(d) See post, p. 120.

constitutes a crossing, and the cheque is crossed generally. Where the cheque bears across its face the name of a banker, with or without the parallel lines or the words "Not negotiable," it is crossed specially, and to that particular banker.

The effect of a general crossing is that the paying banker must pay the amount of the cheque to a banker, and of a special crossing that he must pay the amount to the banker named or to his agent for collection. In no case may a crossed cheque be cashed over the counter, or a specially crossed cheque paid to anyone other than to the banker named, otherwise a banker will render himself liable to the true owner in case of loss. On the other hand, an open (or uncrossed) cheque may be so paid, if in order, to the bearer or payee.

A crossing is a material part of a cheque and may not be altered by anyone in any way except as is authorized by the Act. For this reason a cheque on which the words "not negotiable nave been crossed out should not be paid. Similarly a banker should strongly discourage the practice of "opening a crossed cheque, whereby it has become customary for a drawer to cancel the effect of a crossing by writing on the cheque the words " Please pay cash," followed by his signature or initials. Should a banker decide to act on the alteration, the initials of the drawer should not be accepted, and a signature should be obtained. The practice has no legal sanction, and exposes a banker to several possible dangers. A banker is not liable in the case of any alteration in a crossing if such alteration or obliteration is not apparent.

The drawer of a cheque may cross it generally or specially, and if the cheque is uncrossed, the holder may cross it generally or specially, or convert a general crossing into a special one. Further, he may in either case add the words "not negotiable,' which will take away the negotiable character of the cheque. Where a cheque is crossed specially, the banker to whom it is crossed may cross it specially to another banker for collection.

The words in italics deserve attention, for section 79 (1) of the Act prohibits payment of a cheque crossed by two bankers unless one is acting as agent for the other. Also if an uncrossed cheque or a cheque crossed generally is sent to a banker for collection, he may cross it specially to himself.

Section 82 of the Act is of very great importance in this connection with crossed cheques.

This section has been amplified by the Bills of Exchange (Crossed Cheques) Act, 1906, which now protects a banker even if he places the amount of a cheque to the customer's credit before he has actually collected the proceeds. The combined effect of the sections is that whereas formerly a banker, who credited