A DIGEST

OF THE LAW OF

BILLS OF EXCHANGE.

CHAPTER I.

FORM AND INTERPRETATION OF BILLS.

[EXPLANATORY HEAD NOTE.-The term "Bill," as used in the articles of this Digest, includes, mutatis mutandis, Promissory Note and Cheque as well as Bill of Exchange. When a provision does not apply equally to Notes and Cheques, the full expression "Bill of Exchange" is used. See Introd., p. iv., and head note to Chaps. IX. and X.]

Exchange

Art. 1. A Bill of Exchange is an unconditional Bill of order in writing for the payment of a sum of money, defined. absolutely and at all events.

NOTE.-A Bill of Exchange is frequently called a "Draft." By English law no particular form of words is requisite to its validity (Art. 10), and it need not necessarily be negotiable (Art. 8); therefore negotiability, its chief characteristic, does not enter into the definition. By German Exchange Law, Art. 4, a bill must expressly mention that it is a Bill of Exchange. Subjoined are two common forms:

FORM 1.-INLAND BILL.

No. 10. £100 0 0

London, 1st January, 1870.

Three months after date pay to our order the sum of one

hundred pounds.

Value received.

To Messrs. Brown & Sons, London.

ANDREWS & Co.

B

Bill of

FORM 2.-FOREIGN BILL.

Exchange No. 10. Exchange for £100.

defined.

Calcutta, 1st January, 1870. Six months after sight of this First of Exchange (Second and Third unpaid), pay to the order of Mr. John Charles, one hundred pounds.

Value received, and charge the same to account of Messrs. Smith & Co., against your letter of credit, No. 1.

To Mr. J. Brown, London.

JAMES ANDREWS.

Necessary parties.

Parties.

Art. 2. There must, in point of form, be three parties to a Bill of Exchange in its origin, and two at least of these must be different persons. They are— (1.) The party who gives the order, called the

drawer.

(2.) The party on whom the order is given, called the drawee. If the drawee duly signify his assent thereto, he is called the acceptor, and becomes the principal debtor on the bill.

(3.

The party in whose favour the order is given, called the

payee.

Explanation 1.-The drawer and payee may be the same person, i.e. a bill may be drawn payable to the drawer, or his order.1

Explanation 2.-A bill may be payable to the order of the drawee, if he act in two different capacities.❜

ILLUSTRATION.

B. is in business on his own account. He is also agent for X. A bill is drawn on B. as agent for X., payable to his order on his own account. He accepts and indorses it. This is a valid bill.

1 Buller v. Cripps (1704), 1 Salk. 130, German Exchange Law, Art. 6. 2 Holdsworth v. Hunter (1830), 10 B. & C. 449; Pardessus, § 339.

NOTE. It is clear that the instrument is not a bill, which can Necessary be enforced until it is indorsed away: Cf. R. v. Bartlett (1841), 2 parties. M. & R. 362.

Explanation 3.-If the drawer and drawee be the same person, or if the drawee be a fictitious person, the holder may treat the instrument, at his option, either as a Bill of Exchange or as a Note.1

ILLUSTRATIONS.

The

1. A. & Co. carry on business in London and Liverpool. London house draw a bill on the Liverpool house. The holder may treat it as a note made by the London house payable in Liverpool; and if it be not paid, the omission to give notice of dishonour to the London house is immaterial."

2. A. draws a bill on B. and negotiates it to C.; B. is a fictitious person. C. may treat the bill as a note made by A. He need not prove presentment or give notice of dishonour.3

3. The directors of a joint stock company draw a bill in the name of the company, addressed "To the Cashier." The holder may treat it as a note by the company.*

NOTE. Cf. Art. 139. Fictitious payee or indorser. notes, see Arts. 272 and 274.

As to

Art. 3. "Holder" means the person in possession Holder. of a bill, who by the Law Merchant is entitled to enforce the payment thereof.

payee, indorsee, or bearer.

It includes equally

NOTE. Cf. Art. 125. Holder and de facto holder distinguished.

Art. 4. A Bill of Exchange must be signed by Signature the drawer.5

Explanation. The drawer's signature may be

added at any time, but until it is there the instrument is inchoate and without effect (Art. 23).

1 Miller v. Thomson (1841), 3 M. & Gr. 576; Fairchild v. Ogdensburgh Railway Co. (1857), 15 N. Y. 337; Cf. German Exchange Law, Art. 6.

2 Id. Cf. Willans v. Ayers (1877) 3 L. R. Ap. Ca. 133, P. C.

3 Smith v. Bellamy (1817), 2 Stark. 223.

4 Allen v. Sea, Fire and Life Assurance Co. (1850), 9 C. B. 574.

5Cf. Ex parte Hayward (1871), 6 L. R. Ch. 546 ; German Exchange Law, Art. 4; Nouguier, § 87, 88.

of drawer.

Signature of drawer.

Designation of drawee.

Several

drawees.

ILLUSTRATION.

A. draws a bill on B., payable to drawer's order, but does not sign it. B. accepts, and it is transferred for value to C. The instrument is neither a bill nor a note.1

NOTE.-If a bill payable to drawer's order were indorsed by the drawer, though not signed by him on the face, this would probably be sufficient. It is so in France: Nouguier, § 199; Cf. Art. 32.

Art. 5. The drawee must be designated in a Bill of Exchange with reasonable certainty.2

ILLUSTRATIONS.

1. Instrument in the form of a bill, but addressed to no one. B. writes an acceptance thereon. This is not a bill, and B. is not liable as acceptor. He is, it seems, the maker of a note.

2. Instrument in the form of a bill payable to drawer's order, not containing the name of a drawee, but expressed to be payable "at No. 1, X. Street, London." B., who lives there, accepts it. This is a bill, and B. is liable as acceptor.*

3. Instrument in the form of a bill. Where the address to the drawee should be, are the words "at Messrs. B. & Co." This is a bill addressed to B. & Co.5

NOTE. The question in Illustr. 2 has arisen also in Scotland and France, and has been decided in the same way: Thompson, p. 46; Nouquier, § 131. A cheque in this form would probably be invalid, for the uncertainty could not be cured by acceptance : Cf. Art. 2 as to a Fictitious Drawee.

Art. 6.-A Bill of Exchange may be addressed to two or more drawees, jointly, whether partners or not.

6

NOTE. Can there be an alternative drawee? In Anon. (1701), 12 Mod. 446, a bill addressed to "B., or in his absence to X.," was accepted by B., and was held good. But, as far as appears, X. may have been an ordinary Case of need. An alternative drawee seems to make the payor uncertain: Cf. Ferris v. Bond (1821), 4 B. & Ald. 679, as to construction of a note signed in alternative.

1 McCall v. Taylor (1855), 34 L. J. C. P. 365; Cf. Goldsmid v. Hampton (1858), 5 C. B. N. S. 94.

Cf. Peto v. Reynolds (1854), 9 Exch. 410; 11 Exch. 418, Ex. Ch. ; French Code, Art. 110; German Exchange Law, Art. 4.

3 Id. Cf. also, Arts. 37 and 58.

4 Gray v. Milner (1818), 8 Taunt. 739.

5 Shuttleworth v. Stephens (1808), 1 Camp. 407.

• Cf. Harmer v. Steele (1849), 4 Exch. at 13, Ex. Ch.