Lost Instruments. CH. XVI. s. 2. S. 69. Where a bill has been lost before it is overdue, the person who was the holder of it may apply to the drawer to give to duplicate him another bill of the same tenour, giving security to the drawer of lost bill. if required to indemnify him against all persons whatever in case the bill alleged to have been lost shall be found again. If the drawer on request as aforesaid refuses to give such duplicate bill, he may be compelled to do so. lost bill. S. 70. In any action or proceeding upon a bill, the court or a Action on judge may order that the loss of the instrument shall not be set up, provided an indemnity be given to the satisfaction of the court or judge against the claims of any other person upon the instrument in question. SECT. 3.-Cheques on a Banker. By the Bills of Exchange Act, 1882, S. 73. A cheque is a bill of exchange drawn on a banker payable Cheque on demand (o). Except as otherwise provided in this Part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. S. 74. Subject to the provisions of this Act— (1) Where a cheque is not presented for payment within a reasonable time of its issue, and the drawer or the person on whose account it is drawn had the right at the time of such presentment as between him and the banker to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a creditor of such banker to a larger amount than he would have been had such cheque been paid. (2) In determining what is a reasonable time regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case. (3) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him. (0) See McLean v. Clydesdale Banking Co. (1883), 9 App. Cas. 95; Bellamy v. Marjoribanks (1852), 7 Ex. at p. 404; C.C. and as to banker's obligation to pay, see H H defined. Presentment of cheque for payment. CH. XVI. s. 3. Cheques on a Banker (Act of 1882). Revocation of banker's authority. S. 75. The duty and authority of a banker to pay a cheque drawn on him by his customer are determined by— (1) Countermand of payment: (2) Notice of the customer's death. [Sects. 76-82 relate to crossed cheques.] Promissory note defined. Delivery necessary. Joint and several notes. Note payable on demand. SECT. 4.-Promissory Notes. Sections 83-88 of the Bills of Exchange Act, 1882, enact on this subject as follows: : S. 83. (1) A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer. (2) An instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker. (3) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof. (4) A note which is, or on the face of it purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note. S. 84. A promissory note is inchoate and incomplete until delivery thereof to the payee or bearer. S. 85.—(1) A promissory note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally according to its tenour. (2) Where a note runs "I promise to pay" and is signed by two or more persons it is deemed to be their joint and several note. S. 86. (1) Where a note payable on demand has been indorsed, it must be presented for payment within a reasonable time of the indorsement. If it be not so presented the indorser is discharged. (2) In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade, and the facts of the particular case. (3) Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue. S. 87.-(1) Where a promissory note is in the body of it made CH. XVI. s. 4. Promissory payable at a particular place, it must be presented for payment at Notes. that place in order to render the maker liable. In any other case, presentment for payment is not necessary in order to render the of note for maker liable. payment. (2) Presentment for payment is necessary in order to render the indorser of a note liable. (3) Where a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to render an indorser liable; but when a place of payment is indicated by way of memorandum only, presentment at that place is sufficient to render the indorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall also suffice. S. 88. The maker of a promissory note by making it(1) Engages that he will pay it according to its tenour; (2) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse. Presentment Liability of maker. S. 89.-(1) Subject to the provisions in this Part and, except as Application by this section provided, the provisions of this Act relating to bills of Part II. of exchange apply, with the necessary modifications, to promissory notes. (2) In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer's order. (3) The following provisions as to bills do not apply to notes; namely, provisions relating to (a) Presentment for acceptance; (b) Acceptance; (c) Acceptance suprà protest; (d) Bills in a set. (4) Where a foreign note is dishonoured, protest thereof is unnecessary. to notes. [For sects. 91 and 97, as to signature, and general savings, see p. 453, ante.] CHAPTER XVII. GUARANTEES AND INDEMNITIES. [See De Colyar on Guarantees, 2nd ed., A.D. 1885; Smith's Mercantile Law, 10th ed., A.D. 1890.] General nature of the contract of guarantee. SECT. 1.-General Nature of Contract of Guarantee. THE general nature of a contract of guarantee is sufficiently simple. It is a collateral engagement, to answer for the debt, default, or miscarriage of another (a), as distinguished from an original and direct engagement for the party's own act. It is therefore of the essence of this contract, that there should be some one liable as principal (b); and, accordingly, where one party agrees to become responsible for another, the former incurs no obligation as surety, if no valid claim ever arises against the principal; whilst, on the other hand, the liability of the surety upon a claim which is good as against the principal, ceases so soon as such claim is extinguished. But the rule that a party cannot be liable upon a contract of guarantee, unless the principal be also liable, is, in some cases, true in form or words, rather than in substance. Thus, in the case of a guarantee to answer for the price of goods not necessaries, to be sold to an infant, or other person incompetent to contract, there is no doubt that the party guaranteeing, though professedly contracting only in the character of a surety, would be responsible: for, either he could not urge the incapacity of the supposed (a) See Statute of Frauds, 29 Car. 2, c. 3, s. 4, p. 102, ante. (b) Per Lord Selborne, in Lakeman v. Mountstephen (1874), L. R., 7 H. L. 17. principal; or he might, by construction of law, be himself treated CH. XVII. s. 1. as the principal. General Nature of Contract of for. We have already seen that, in the case of every simple contract, a consideration is necessary to give it validity. And we now remark further that, in the case of a guarantee, the mere existence Consideration of the debt, default, or miscarriage, in respect of which it is given, is not a sufficient consideration to support it: so that, unless there be some further consideration for the promise of the guarantor, such promise will be void. deration in sufficient. Thus, a promise to pay a debt already incurred by another, is Past consinot binding without some new consideration, such as forbearance (c); or without showing that such past consideration was moved at the defendant's request (d). And even in the case of a promissory note given by way of guarantee for a past debt, if it be shown that there was no consideration, such as forbearance, this will be an answer to an action on the note (e). advance. But a guarantee of a debt already incurred; or of such a debt Guarantee of and a debt to be afterwards incurred, given in consideration of a consideration past debt, in future advance of money or sale of goods, by the creditor to the of future original debtor, is good (ƒ). And it was probably on this ground, that the following memorandum was held to be sufficient :-“I hereby guarantee the present account of Miss H. M., due to R. T. S. & Co., of 112l.; and what she may contract from this date to the 30th September next" (g). So where, in consideration of advances made and to be made to Guarantee of A. and B., the defendant guaranteed to A. and B. the repayment advances. past and future of the said advances, this was held to be good (h). And a guarantee will be good, although it may be doubtful whether it referred to a past or a future credit,-provided it appear from all the circumstances that the parties contemplated the latter (i); and evidence is admissible to show what the transaction really was (k). For one consideration to be done on the one side stated in a document is at all events primâ facie consideration for all that is to be done on the other, and all the premises are to (c) See French v. French (1841), 2 M. & G. 644. (d) See Payne v. Wilson (1827), 7 B. & C. 423; Johnson v. Nicholls (1845), 1 C. B. 251, 261, n. (a). (e) Crofts v. Beale (1851), 11 C. B. 172. (f) See White v. Woodward (1848), 5 C. B. 810; Boyd v. Moyle (1846), 2 C. B. 644; Johnson v. Nicholls (1845), 1 C. B. 251; and see Westhead v. Sproson (1861), 6 H. & N. 728. (g) Russell v. Moseley (1822), 3 B. & B. 211. (h) Chapman v. Sutton (1846), 2 C. B. 634. As to continuing guarantee, see Wood v. Priestner (1867), L. R., 2 Ex. 282, Ex. Ch., and post, p. 480 et seq. (i) Colbourn v. Dawson (1851), 10 C. B. 765; Steele v. Hoe (1849), 14 Q. B. 431; Edward v. Jevons (1849), 8 C. B. 436; Goldshede v. Swan (1847), 1 Exch. 154; Broom v. Bachelor (1856), 1 H. & N. 255. (k) Goldshede v. Swan (1847), 1 Exch. 154; and see Butcher v. Stewart (1843), 11 M. & W. 857; Haigh v. Brooks (1839), 10 A. & E. 309. |