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I am under a particular obligation to the writers of the reviews in the Irish Law Times, Law Magazine, and Review and Journal of the Institute of Bankers for their valuable suggestions, which have, as far as possible, been adopted.



July, 1902


The object of this little book is to present in a concise form the law relating to what are by far the most powerful instruments for economising the currency, and the most common of all legal, and especially of all negotiable, instruments.

The sources of the law relating to cheques are fourfold : first, that part of the Bills of Exchange Act of 1882, which especially applies to cheques, viz., 88. 73 to 82 inclusive; secondly, the decisions as to cheques since the Act; thirdly, the provisions of the Act applicable to bills of exchange payable on demand, except in so far as the part relating to cheques has “otherwise provided"; fourthly, the decisions previous to the Act. It is these latter two sources which alone are difficult correctly to appreciate and apply.

S. 73 provides that “a cheque is a bill of exchange drawn on a banker payable on demand," and it adds, " Except as otherwise provided in this part” (viz., ss. 73 to 82) “ the provisions of this Act applicable to a bill of exchange payable on

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demand apply to a cheque." And the difficulties chiefly arise from the want of harmony between some of the previous decisions on cheques, and some of the provisions which, under s. 73, are presumably applicable to cheques.

Other difficulties arise from the wording of parts of the Act leaving it uncertain how far its provisions are intended to affect the case law previous to it.

To some of these difficulties I will now address myself.

The first arises on the ss. 8 and 73 of the Bills of Exchange Act. S. 8 purports to describe “what bills are negotiable," and Fry, L. J., in National Bank v. Silke, 1891, 1 Q. B. 435, at p. 439, says that it divides bills into three classes--bills not negotiable, bills payable to order, and bills payable to bearer. But when we look at sub-s. (1) we see it really divides bills into bills not transferable, bills payable to order, and bills payable to bearer.

The sub-section is as follows: "When & bill contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but is not negotiable."

The last word is not happily used ; such a bill is not transferable ; à fortiori it is not negotiable; but these terms are not synonymous. A bill or

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cheque may be not negotiable and get freely transferable. To see this one has only to look at ss. 36 (2) and 81.

This confusion of language has left its traces in the judgments of Lindley and Fry, L. JJ., in National Bank v. Silke, supra; and Lindley, L. J., doubted whether a cheque could be made "not negotiable " under 8. 8 or otherwise than under 88. 76–82. Probably it was present to his mind that ss. 76—82 had “otherwise provided" for making cheques not negotiable, and therefore on the language of s. 73, s. 8 was inapplicable to cheques.

But I venture to think his difficulty arose solely from the confusion of language of which this section affords by no means the sole instance.

Ss. 76 and 81 provide for crossing cheques " not negotiable.” By s. 81 it is clear that such crossing leaves cheques transferable. But s. 8 (1) provides for making bills not transferable. There is no provision in the part relating to cheques to the effect that s. 8 (1) does not apply to cheques, and there is no provision in that part “otherwise providing" for making cheques not transferable.

Therefore I submit that 8. 73 makes s. 8 (1) applicable to cheques.

However, the observations of Fry, L. J., that neither “bearer "nor“ order” cheques can be made not transferable under s. 8, seem well founded.

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If it is desired to make a cheque not transferable, it is useless to make it payable to order and merely cross it to the payee's account at his bank. (National Bank v. Silke, supra.)

The language to be employed, I submit, is some such language as 8. 85 provides for restrictively indorsing a bill so as to prevent further transfer, the restrictive order being written on the face, instead of on the back, of the instrument-e.g., “Pay Albert Jones only” or “Pay Albert Jones for the account of James Lock."

It is much to be regretted that the Act does not clearly distinguish “negotiable” and “transferable.” In some sections the word “negotiable " is used as synonymous with “ transferable,” as, for example, in 8. 36; restrictive indorsement, unless otherwise expressed, and discharge make a bill no longer transferable as such, but s. 36 (1) only says that they put an end to negotiability. Again, the marginal note to s. 8 is "what bills are negotiable,once more using the word where "transferable" is meant.

And in ss. 31 and 58 we meet with the expression negotiate by delivery." These inexact expressions are rightly condemned by Willis (“ Negotiable Securities," first ed., p. 11) as misleading.

On the other hand, when treating of cheques, 8. 81 of the Act clearly uses the word “negotiable"

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