chapter 92 bills of exchange force;

OrdinancesNos. 25 of 1927,

30 of 1930,ActsNos. 5 of 1955,

25 of 1957,30 of 1961.

CHAPTER 92BILLS OF EXCHANGE

AN ORDINANCE TO DECLARE THE LAW RELATING TO BILLS OF EXCHANGE, CHEQUES,BANKERS' DRAFTS. AND PROMISSORY NOTES.

Short title.

Interpretation.

PARTI

PRELIMINARY

1. This Ordinance may be cited as theBills of Exchange Ordinance.

2. In this Ordinance, unless the contextotherwise requires—

" acceptance" means an acceptancecompleted by delivery ornotification;

" action " includes a claim in reconventionand set-off;

"banker" includes a body of persons,whether incorporated or not, whocarry on the business of banking;

" bank holiday " means a day appointedto be a bank holiday by or underthe powers contained in anyenactment for the time being inforce;

" bankrupt" includes any person whoseestate is vested in a trustee orassignee under the law for the timebeing in force relating to insolvencyor bankruptcy;

" bearer " means the person in possessionof a bill or note which is payable tobearer;

" bill" means bill of exchange, and" note " means promissory note;

" delivery " means transfer of possession,actual or constructive, from oneperson to another;

[1st March, 1928.]

" holder " means the payee or indorsee ofa bill or note who is in possessionof it, or the bearer thereof;

" indorsement " means an indorsementcompleted by delivery;

" issue " means the first delivery of a billor note, complete in form, to aperson who takes it as a holder;

" value " means valuable consideration ;

" written" includes printed, and" writing " includes print.

PART II

BILLS OF EXCHANGE

FORM AND INTERPRETATION

3. (1) A bill of exchange is anunconditional order in writing, addressed byone person to another, signed by the persongiving it, requiring the person to whom it isaddressed to pay on demand, or at a fixed

-or determinable future time, a sum certainin money to or to the order of a specifiedperson, or to bearer.

(2) An instrument which does notcomply with these conditions, or whichorders any act to be done in addition to thepayment of money, is not a bill of exchange.

(3) An order to pay out of a particularfund is not unconditional within themeaning of this section ; but an unqualifiedorder to pay, coupled with (a) an indicationof a particular fund out of which the draweeis to reimburse himself or a particular

Bill ofexchangedefined.

Particularfund.

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BILLS OF EXCHANGE [Cap.92

Date, place,and value.

Inland andforeign bills.

Effect wheredifferentparties to billare the sameperson.

Drawer anddrawee sameperson or firm.

Address todrawee.

Certaintyrequired as topayee.

account to be debited with the amount, or{b) a statement of the transaction whichgives rise to the bill, is unconditional.

(4) A bill is not invalid by reason—

(a) that it is not dated ;

(b) that it does not specify the valuegiven, or that any value has beengiven therefor ;

(c) that it does not specify the placewhere it is drawn or the place whereit is payable.

4. (1) An inland bill is a bill which is, oron the face of it purports to be—

(a) both drawn and payable within SriLanka,or

(b) drawn within Sri Lanka upon someperson resident therein.

Any other bill is a foreign bill.

(2) Unless the contrary appear on theface of the bill the holder may treat it as aninland bill.

5. (1) A bill may be drawn payable to,or to the order of, the drawer ; or it may bedrawn payable to, or to the order of, thedrawee.

(2) Where in a bill drawer and drawee arethe same person, or where the drawee is afictitious person or a person not havingcapacity to contract, the holder may treatthe instrument, at his option, either as a billof exchange or as a promissory note.

6. (1) The drawee must be named orotherwise indicated in a bill with reasonablecertainty.

(2) A bill may be addressed to two ormore drawees whether they are partners ornot, but an order addressed to two draweesin the alternative, or to two or moredrawees in succession, is not a bill ofexchange.

7. (1) Where a bill is not payable tobearer, the payee must be named orotherwise indicated therein with reasonablecertainty.

(2) A bill may be made payable to twoor more payees jointly, or it may be madepayable in the alternative to one of two, or

one or some of several payees. A bill mayalso be made payable to the holder of anoffice for the time being.

(3) Where the payee is a fictitious or non-existing person the bill may be treated aspayable to bearer.

8. (1) When a 'bill 'contains words What bills areprohibiting transfer, or indicating an negotiable.intention that it should not be transferable,it is valid as between the parties thereto, butis not negotiable,

(2) A negotiable bill may be payableeither to order or to bearer.

(3) A bill is payable to bearer which isexpressed to be so payable, or on which theonly or last indorsement is an indorsementin blank.

(4) A bill is payable to order which isexpressed to be so payable, or which isexpressed to be payable to a particularperson, and does not contain wordsprohibiting transfer or indicating anintention that it should not be transferable.

(5) Where a bill, either originally or byindorsement, is expressed to be payable tothe order of a specified person, and not tohim or his order, it is nevertheless payableto him or his order at his option.

9. (1) The sum payable by a bill is a Sum payable.sum certain within the meaning of thisOrdinance, although it is required to bepaid—

(a) with interest;

(b) by stated instalments ;

(c) by stated instalments, with aprovision that upon default inpayment of any instalment thewhole shall become due ;

(d) according to an indicated rate ofexchange, or according to a rate ofexchange to be ascertained asdirected by the bill.

(2) Where the sum payable is expressedin words and also in figures, and there is adiscrepancy between the two, the sumdenoted by the words is the amountpayable.

(3) Where a bill is expressed to bepayable with interest, unless the instrument

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Cap.92] BILLS OF EXCHANGE

Bill payable ondemand.

Bill payable ata future time.

Omission ofdate in billpayable afterdate, oracceptanceafter sight.

otherwise provides, interest runs from thedate of the bill, and if the bill is undated,from the issue thereof.

(4) Where. a bill is expressed to bepayable with interest, unless the instrumentotherwise provides, the interest shall be atthe rate of mneper centum per annum :

Provided that the amount recoverable onaccount of interest or arrears of interestshall in no case exceed the principal.

10. (1) A bill is payable on demand—

(a) which is expressed to be payable ondemand, or at sight, or onpresentation ; or

(b) in which no time for payment isexpressed.

(2) Where a bill is accepted or indorsedwhen it is overdue, it shall, as regards theacceptor who so accepts, or any indorserwho so indorses it, be deemed a bill payableon demand.

11. (1) A bill is payable at adeterminable future time within the meaningof this Ordinance which is expressed to bepayable—

(a) at a fixed period after date or sight ;

(b) on or at a fixed period after theoccurrence of a specified eventwhich is certain to happen, thoughthe time of happening may beuncertain.

(2) An instrument expressed to bepayable on a contingency is not a bill, andthe happening of the event does not cure thedefect.

12. Where a bill expressed to be payableat a fixed period after date is issuedundated, or where the acceptance of a billpayable at a fixed period after sight isundated, any holder may insert therein thetrue date of issue or acceptance, and the billshall be payable accordingly :

Provided that—

(i) where the holder in good faith and bymistake inserts a wrong date, and

(ii) in every case where a wrong date isinserted, if the bill subsequently comes intothe hands of a holder in due course the billshall not be avoided thereby, but shalloperate and be payable as if the date soinserted had been the true date.

13. (1) Where a bill or an acceptance Presumption asor any indorsement on a bill is dated, the to date being

, ,, , , , , , true date.date shall, unless the contrary be proved, bedeemed to be the true date of the drawing,acceptance, or indorsement, as the case maybe.

(2) A bill is not invalid by reason onlythat it is antedated or postdated, or that itbears date on a Sunday.

14. Where a bill is not payable on Computationdemand, the day on which it falls due is oftlmeof p a y m e n t .determined as follows :—

(1) Three days, called days of grace, are,in every case where the bill itselfdoes not otherwise provide, addedto the time of payment as fixed bythe bill, and the bill is due andpayable on the last day of grace :

* Provided that—

(a) when the last day of grace fallson a day appointed to be apublic holiday by or underany law for the time being inforce, the bill is, except in thecase hereinafter provided for,due and payable on thepreceding business day ;

(b) when the last day of grace is abank holiday, or when the lastday of grace is a Sunday andthe second day of grace is abank holiday, the bill is dueand payable on the succeedingbusiness day.

(2) Where a bill is payable at a fixed period after date, after sight, or

after the happening of a specifiedevent, the time of payment is

* The changes made to the proviso to section 14 (1) have been necessitated by the provisions of section 3 of theHolidays Act (No. 29 of 1971) — reproduced in this Edition as Chapter 364 — which materially differs from thenow repealed Holidays Ordinance. No. 1 of 1928, reproduced as Chapter 135 in Volume III of the 1938 Edition ofthe Legislative Enactments.

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BILLS OF EX CHANGE [Cap.92

[§ 2, 30 of1961.]

Case of need.

Specialstipulations bydrawer orindorserrestrictingliability.

Definition andrequisites ofacceptance.

Time foracceptance.

determined by excluding the dayfrom which the time is to begin torun and by including the day ofpayment.

(3) Where a bill is payable at a fixedperiod after sight, the time begins torun from the date of the acceptanceif the bill be accepted, and from thedate of noting or protest if the billbe noted or protested for non-acceptance, or for non-delivery.

(4) The term " Shoes ** " u>rrfib *' or" month " in a bill means calendarmonth.

15. The drawer of a bill and anyindorser may .insert therein the name of aperson to whom the holder may resort incase of need, that is to say, in case the bill isdishonoured by non-acceptance or non-payment. Such person is called the referee incase of need. It is in the option of the holderto resort to the referee in case of need ornot, as he may think fit.

16. The drawer of a 'bill» and anyindorser, may insert therein an expressstipulation—

(a) negativing or limiting his ownliability to the holder ;

' ( b ) waiving as regards himself some orall of the holder's duties.

17. (1) The acceptance of a bill is thesignification by the drawee of his assent tothe order of the drawer.

(2) An acceptance is invalid unless itcomplies with the following conditions,namely :—

(a) It must be written on the bill and besigned by the drawee. The meresignature of the drawee withoutadditional words is sufficient.

(b) It must not express that the draweewill perform his promise by anyother means than the payment ofmoney.

18. A bill may be accepted—

(a) before it has been signed by thedrawer, or while otherwise incomplete ;

(b) when it is overdue, or after it hasbeen dishonoured by a previousrefusal to accept, or bynon-payment ;

(c) when a bill payable after sight isdishonoured by non-acceptance,and the drawee subsequentlyaccepts it, the holder, in the absenceof any different agreement, isentitled to have the bill accepted asof the date of first presentment tothe drawee for acceptance.

19. (1) An acceptance is either—

(a) general, or

(b) qualified.

General andqualifiedacceptances.

(2) A general acceptance assents withoutqualification to the order of the drawer. Aqualified acceptance in express terms variesthe effect of the bill as drawn.

(3) In particular an acceptance isqualified which is—

(a) conditional, that is to say, whichmakes payment by the acceptordependent on the fulfilment of acondition therein stated ;

(b) partial, that is to say, an acceptanceto pay part only of the amount forwhich the bill is drawn ;

(c) local, that is to say, an acceptance topay only at a particular specifiedplace ;

(d) qualified as to time ;

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

(4) An acceptance to pay at a particularplace is a general acceptance, unless itexpressly states that the bill is to be paidthere only, and not elsewhere.

20. (1) Where a simple signature on a inchoateblank stamped paper is delivered by the instruments o

, , . , . , . . blanksigner in order that it may be converted into signaturesa bill, it operates as a prima facie authorityto fill it up as a complete bill for anyamount the stamp will cover, using thesignature for that of the drawer, or theacceptor, or an indorser ; and, in likemanner, when a bill is wanting in anymaterial particular, the person in

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Delivery tocompletecontract.

possession of it has a prima facie authorityto fill up the omission in any way he thinksfit.

(2) In order that any such instrumentwhen completed may be enforceable againstany person who beame a party thereto priorto its completion, it must be filled up withina reasonable time, and strictly in accordancewith the authority given. Reasonable timefor this purpose is a question of fact;

Provided that if any such instrument aftercompletion is negotiated to a holder in duecourse, it shall be valid and effectual for allpurposes in his hands, and he may enforce itas if it had been filled up within areasonable time and strictly in accordancewith the authority given.

21. (1) Every contract on a bill,whether it be the drawer's, the acceptor's, oran indorser's, is incomplete and revocableuntil delivery of the instrument in order togive effect thereto ;

Provided that where an acceptance iswritten on a bill. and the drawee givesnotice to or according to the directions ofthe person entitled to the bill that he hasaccepted it, the acceptance then becomescomplete and irrevocable.

(2) As between immediate parties, andas. regards a remote party other than aholder in due course, the delivery—

(a) in order to be effectual must bemade either by or under theauthority of the party drawing,accepting, or indorsing, as the casemay be ;

(b) may be shown to have beenconditional or for a special purposeonly, and not for the purpose oftransferring the property in the bill.

But if the bill be in the hands of a holderin due course a valid delivery of the bill byall parties prior to him so as to make themliable to him is conclusively presumed.

(3) Where a bill is no longer in thepossession of a party who has signed it asdrawer, acceptor, or indorser, a valid andunconditional delivery by him is presumeduntil the contrary is proved.

CAPACITY AND AUTHORITY OF PARTIES

22. (I) Capacity to incur liability as a Capacity ofparty to a bill is coextensive with capacity to Parties.contract.

(2) Where such capacity is to bedetermined by the law of Sri Lanka, it shallbe determined by Roman-Dutch law asadministered in Sri Lanka subject to theprovisions of any enactment affecting thatlaw.

(3) Provided that nothing in this sectionshall enable a corporation to make itselfliable as drawer, acceptor, or indorser of abill, unless it is competent to it so to dounder the law for the time being in forcerelating to corporations.

(4) Where a bill is drawn or indorsed bya minor or corporation having no capacityor power to incur liability on a bill, thedrawing or indorsement entitles the holderto receive payment of the bill, and toenforce it against any other party thereto.

23. No person is liable as drawer. Signatureindorser, or acceptor of a bill who has not esential to, .,' . liability.signed it as such :

Provided that—

(a) where a person signs a bill in a tradeor assumed name, he is liablethereon as if he had signed it in hisown name ;

(b) the signature of the name of a firm isequivalent to the signature by theperson so signing of the names ofall persons liable as partners in thatfirm.

24. Subject to the provisions of this Forged orOrdinance, where a signature on a bill is "unauthorized"forged or placed thereon without the signatureauthority of the person whose signature itpurports to be, the forged or unauthorizedsignature is wholly inoperative, and no rightto retain the bill or to give a dischargetherefor or to enforce payment thereofagainst any party thereto can be acquiredthrough or under that signature, unless theparty against whom it is sought to retain orenforce payment of the bill is precludedfrom setting up the forgery or want ofauthority :

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Procurationsignatures.

Provided that nothing in this section shallaffect the ratification of an unauthorizedsignature not amounting to a forgery.

25. A signature by procuration operatesas notice that the agent has but a limitedauthority to sign, and the principal is onlybound by such signature if the agent in sosigning was acting within the actual limits ofhis authority.

26. (1) Where a person signs a bill asdrawer, indorser, or acceptor, and addswords to his signature, indicating that hesigns for or on behalf of a principal, or in arepresentative character, he is not personallyliable thereon; but the mere addition to hissignature of words describing him as anagent, or as filling a representativecharacter, does not exempt him frompersonal liability.

Persons signingas agent or inrepresentativecapacity.

(2) In determining whether a signature ona bill is that of the principal or that of theagent by whose hand it is written, theconstruction most favourable to the validityof the instrument shall be adopted.

THE CONSIDERATION FOR A BILL

Value defined. 27. (1) Valuable consideration for a billmay be constituted by—

(a) any consideration which by the law ofEngland is sufficient to support asimple contract;

(b) an antecedent debt or liability. Such adebt or liability is deemed valuableconsideration whether the bill ispayable on demand or at a futuretime.

(2) Where value has at any time beengiven for a bill, the holder is deemed to be aholder for value as regards the acceptor andall parties to the bill who became partiesprior to such time.

(3) Where the holder of a bill has a lienon it, arising either from contract or byimplication of law, he is deemed to be a*holder for value to the extent of the sum forwhich he has a lien.

Accommodation 28. (1) An accommodation party to abill or party, bill is a person who has signed a bill as

drawer, acceptor, or indorser, without

receiving value therefor, and for the purposeof lending his name to some other person.

(2) An accommodation party is liable onthe bill to a holder for value; and it isimmaterial whether, when such holder tookthe bill, he knew such party to be anaccommodation party or not.

29. (1) A holder in due course is a Holder in dueholder who has taken a bill, complete and course-regular on the face of it, under the followingconditions, namely:—

(a) that he became the holder of it beforeit was overdue, and without noticethat it had been previouslydishonoured, if such was the fact;

(b) that he took the bill in good faith andfor value, and that at the time thebill was negotiated to him he hadno notice of any defect in the titleof the person who negotiated it,

(2) In particular the title of a person whonegotiates a bill is defective within themeaning of this Ordinance when heobtained the bill, or the acceptance thereof,by fraud, duress, or force and fear, or otherunlawful means, or for an illegalconsideration, or when he negotiates it inbreach of faith, or under such circumstancesas amount to a fraud.

(3) A holder (whether for value or not)who derives his title to a bill through aholder in due course, and who is not himselfa party to any fraud or illegality affecting it,has all the rights of that holder in duecourse as regards the acceptor and allparties to the bill prior to that holder.

30. (1) Every party whose signature Presumption ofappears on a bill is prima facie deemed to value and goodhave become a party thereto for value. faith

(2) Every holder of a bill is prima faciedeemed to be a holder in due course ; but ifin an action on a bill it is admitted orproved that the acceptance, issue, orsubsequent negotiation of the bill is affectedwith fraud, duress, or force and fear, orillegality, 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 thebill.

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NEGOTIATION OF BILLS

Negotiation 31. (1) A bill is negotiated when it isdefined, transferred from one person to another in

such a manner as to constitute the transfereethe holder of the bill.

(2) A bill payable to bearer is negotiatedby delivery.

(3) A bill payable to order is negotiatedby the indorsement of the holder completedby delivery.

(4) Where the holder of a bill payable tohis order transfers it for value withoutindorsing it, the transfer gives the transfereesuch title as the transferor had in the billand the transferee in addition acquires theright to have the indorsement of thetransferor.

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

Requisites of a 32. An indorsement in order to operatevalid as a negotiation must comply with theindorsement, r ,, • ,• . ,following conditions, namely :—

(1) It must be written on the bill itselfand be signed by the indorser. Thesimple signature of the indorser onthe bill, without additional words,is sufficient.

An indorsement written on an allonge, oron a " copy " of a bill issued ornegotiated in a country where" copies " are recognized, is deemedto be written on the bill itself,

(2) It must be an indorsement of theentire bill. A partial indorsement,that is to say, an indorsement whichpurports to transfer to the indorseea part only of the amount payable,or which purports to transfer thebill to two or more indorseesseverally, does not operate as anegotiation of the bill.

(3) Where a bill is payable to the order oftwo or more payees or indorseeswho are not partners all must or indorse, unless the one indorsinghas authority to indorse for the others.

(4) Where, in a bill payable to order, thepayee or indorsee is wronglydesignated, or his name is misspelt,he may indorse the bill as thereindescribed, adding if he think fit,his proper signature.

(5) Where there are two or moreindorsements on a bill, eachindorsement is deemed to have beenmade in the order in which itappears on the bill until thecontrary is proved.

(6) An indorsement may be made inblank or special. It may alsocontain terms making it restrictive.

33. Where a bill purports to be indorsed Conditionalconditionally the condition may be indorsement.disregarded by the payer, and payment tothe indorsee is valid whether the conditionhas been fulfilled or not.

34. (1) An indorsement in blank indorsement inspecifies no indorsee, and a bill so indorsed blank-becomes payable to bearer.

(2) A special indorsement specifies theperson to whom, or to whose order, the billis to be payable.

*(3) The provisions of this Ordinance

relating to a payee apply with the necessarymodifications to an indorsee under a specialindorsement.

(4) When a bill has been indorsed inblank, any holder may convert the blankindorsement into a special indorsement bywriting above the indorsees signature adirection to pay the bill to or to the order ofhimself or some other person.

35. (1) An indorsement is restrictivewhich prohibits the further negotiation ofthe bill, or which expresses that it is a mereauthority to deal with the bill as therebydirected and not a transfer of the ownershipthereof, as, for example, if a bill beendorsed—

Restrictiveindorsement,

[§3,30 of1961.]

" Pay D only " ;

" Pay D for the account of X " ;

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How long billcontinuesnegotiable.

Negotiation ofbill to partyalready liablethereon.

"Pay D or order forcoilection ".

(2) A restrictive indorsement gives theindorsee the right to receive payment of thebill and to sue any party thereto that hisindorser could have sued, but gives him nopower to transfer his rights as indorseeunless it expressly authorize him to do so.

(3) Where a restrictive indorsementauthorizes further transfer, all subsequentindorsees take the bill with the same rightsand subject to the same liabilities as the firstindorsee under the restrictive indorsement.

36. (!) Where a bill is negotiable in itsorigin it continues to be negotiable until ithas been—

(a) restrictively indorsed, or

(b) discharged by payment or otherwise,

(2) Where an overdue bill is negotiated, itcan only be negotiated subject to any defectof title affecting it at its maturity, andthenceforward no person who takes it canacquire or give a better title than that whichthe person from whom he took it had.

(3) A bill payable on demand' is deemedto be overdue within the meaning and forthe purposes of this section, when it appearson the face of it to have been in circulationfor an unreasonable length of time. What isan unreasonable length of time, for thispurpose is a question of fact.

(4) Except where an indorsement bearsdate after the maturity of the bill, everynegotiation is prima facie deemed to havebeen effected before the bill was overdue.

(5) Where a bill which is not overdue hasbeen dishonoured, any person who takes itwith notice of the dishonour takes it subjectto any defect of title attaching thereto at thetime of dishonour, but nothing in thissubsection shall affect the rights of a holderin due course.

37. Where a bill is negotiated back tothe drawer, or to a prior indorser, or to theacceptor, such party may, subject to theprovisions of this Ordinance, reissue andfurther negotiate the bill, but he is not

entitled to enforce payment of the billor against any intervening party to whom he

was previously liable.

38. The rights and powers of the holder Rights of theof a bill are as follows :— holder-

(a) he may sue on the bill in his ownname;

(b) where he is a holder in due course,he holds the bill free from anydefect of title of prior parties, aswell as from mere personal defencesavailable to prior parties amongthemselves, and may enforcepayment against all parties liable onthe bill;

(c) where his title is defective—

(i) if he negotiates the bill to aholder in due course, thatholder obtains a good andcomplete title to the bill, and

(ii) if he obtains payment of thebill, the person who pays himin due course gets a validdischarge for the bill.

GENERAL DUTIES OF THE HOLDER

39. (1) Where a bill is payable aftersight, presentment for acceptance isnecessary in order to fix the maturity of theinstrument.

(2) Where a bill expressly stipulates thatit shall be presented for acceptance, orwhere a, bill is drawn payable elsewhere thanat the residence or place of business of thedrawee, it must be presented for acceptancebefore it can be presented for payment.

(3) In no other case is presentment foracceptance necessary in order to renderliable any party to the bill.

(4) Where the holder of a bill, drawnpayable elsewhere than at the place ofbusiness or residence of the drawee, has nottime, with the exercise of reasonablediligence, to present the bill for acceptancebefore presenting it for payment on the daythat it falls due, the delay caused bypresenting the bill for acceptance beforepresenting it for payment is excused, anddoes not discharge the drawer andindorsers.

Whenpresentmentfor acceptanceis necessary.

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Time forpresenting billpayable aftersight.

Rulesregardingpresentmentfor acceptance,and excuses fornon-presentment.

.40. (I) Subject to the provisions of thisOrdinance, when a bill payable after sight isnegotiated, the holder must either present itfor acceptance or negotiate it within areasonable time.

(2) If he do not do so, the drawer and allindorsers prior to that holder aredischarged.

(3) In determining what is a reasonabletime within the meaning of this section,regard shall be had to the nature of the bill,the usage of the trade with respect to similarbills, and the facts of the particular case.

41. (1) A bill is duly presented foracceptance which is presented in accordancewith the following rules;—

(a) the presentment must be made by oron behalf of the holder to thedrawee or to some personauthorized to accept or refuseacceptance on his behalf at areasonable hour on a business dayand before the bit! is overdue ;

(b) where a bill is addressed to two ormore drawees, who are notpartners, presentment must bemade to them all, unless one hasauthority to accept for all, thenpresentment may be made to himonly;

(c) where the drawee is deadpresentment may be made to hispersonal representative;

(d) where the drawee is insolvent orbankrupt, presentment may bemade to him or to his assignee ortrustee;

(e) where authorized by agreement orusage, a presentment through thepost office is sufficient;

(f) where the day on which a bill shouldbe presented is a bank holiday, thebill shall be presented on thesucceeding business day. *

(2) Presentment in accordance with theserules is excused and a bill may be treated asdishonoured by non-acceptance—

- (ff) where the drawee is dead, insolvent,or bankrupt, or is a fictitious

Non-acceptanceaftercustomarytime.

person or a person not havingcapacity to contract by bill;

(b) where, after the exercise ofreasonable diligence, suchpresentment cannot be effected ;

(c) where, although the presentment hasbeen irregular, acceptance has beenrefused on some other ground.

(3) The fact that the holder has reason tobelieve that the bill, on presentment, will bedishonoured does not excuse presentment.

42. (1) When a bill is duly presented foracceptance, and is not accepted within thecustomary time, the person presenting itmust treat it as dishonoured by non-acceptance. If he do not, the holder shalllose his right of recourse against the drawerand indorsers.

(2) Where the day on which a bill shouldbe accepted is a bank holiday, the bill shallbe accepted on the succeeding business day.

43. (1) A bill is dishonoured bynon-acceptance—

(a) when it is duly presented foracceptance, and such an acceptanceas is prescribed by this Ordinance isrefused or cannot be obtained ; or

(b) when presentment for acceptance isexcused and the bill is not accepted.

(2) Subject to the provisions of thisOrdinance, when a bill is dishonoured bynon-acceptance, an immediate right ofrecourse against the drawer and indorsersaccrues to the holder, and no presentmentfor payment is necessary,

44. (1) The holder of a bill may refuseto take a qualified acceptance, and if hedoes not obtain an unqualified acceptancemay treat the bill as dishonoured bynon-acceptance.

(2) Where a qualified acceptance is taken,and the drawer or an indorser has notexpressly or impliedly authorized the holderto take a qualified acceptance, or does notsubsequently assent thereto, such drawer orindorser is discharged from his liability onthe bill.

Dishonour bynon-acceptanceand itsconsequences.

Duties as toqualifiedacceptances.

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The provisions of this subsection do notapply to a partial acceptance, whereof duenotice has been given. Where a foreign billhas been accepted as to part, it must beprotested as to the balance,

(3) When the drawer or indorser of a billreceives notice of a qualified acceptance,and does not within a reasonable timeexpress his dissent to the holder, he shall bedeemed to have assented thereto.

Presentment 45. Subject to the provisions of thisfor payment. Ordinance a bill must be duly presented for

payment. If it be not so presented thedrawer and indorsers shall be discharged.

A bill is duly presented for paymentwhich is presented in accordance with thefollowing rules:—

(1) Where the bill is not payable' ondemand, presentment must be madeon the day it falls due.

(2) Where the bill is payable on demand,then, subject to the provisions ofthis Ordinance, presentment mustbe made within a reasonable timeafter its issue in order to render thedrawer liable, and within areasonable time ' after itsindorsement, in order to render theindorser liable.

In determining what is a reasonable time,regard shall be had to the nature ofthe bill, the usage of trade withregard to similar bills, and the factsof the particular case.

(3) Presentment must be made by theholder or by some personauthorized to receive payment onhis behalf at a reasonable hour on abusiness day, at the proper place ashereinafter defined, either to- theperson designated by the bill aspayer, or to some person authorizedto pay or refuse payment on hisbehalf if with the exercise ofreasonable diligence such personcan there be found-

(4) A bill is presentedplace—

at the proper

(a) where a place of payment isspecified in the bill and thebill is there presented;

(b) where no place of payment isspecified, but the address ofthe drawee or acceptor isgiven in the bill, and the bill isthere presented;

(c) where no place of payment isspecified, and no addressgiven, and the bill is presentedat the drawee's or acceptor'splace of business, if known,and if not, at his ordinaryresidence if known;

(d) in any other case, if presented tothe drawee or acceptor,wherever he can be found, orif presented at his last knownplace of business or residence.

(5) Where a bill is presented at the properplace, and after the exercise ofreasonable diligence no personauthorized to pay or refusepayment can be found there, nofurther presentment to the draweeor acceptor is required.

(6) Where a bill is drawn upon oraccepted by two or more personswho are not partners, and no placeof payment is specified,presentment must be made to themall.

(7) Where the drawee or acceptor of a billis dead, and no place of payment isspecified, presentment must bemade to a personal representative,.if such there be, and with theexercise of reasonable diligence hecan be found.

(8) Where authorized by agreement orusage a presentment through thepost office is sufficient.

46. (1) Delay in making presentment forpayment is excused when the delay is causedby circumstances beyond the control of theholder, and not imputable to his default,misconduct, or negligence. When the causeof delay ceases to operate presentment mustbe made with reasonable diligence.

Excuses fordelay or non-presentmentfor payment.

13- IV/171


(2) Presentment for payment is dispensedwith—

(a) where, after the exercise of reasonablediligence, presentment, as requiredby this Ordinance, cannot beeffected ;

(b) where the drawee is a fictitiousperson;

(c) as regards the drawer, where thedrawee or acceptor is not bound, asbetween himself and the drawer, toaccept or pay the bill, and thedrawer has no reason to believe thatthe bill would be paid if presented ;

(d) as regards an indorser, where the billwas accepted or made for theaccommodation of that indorser,and he has no reason to expect thatthe bill would be paid if presented ;

(e) by waiver of presentment, express orimplied.

(3) The fact that the holder has reason tobelieve that the bill will, on presentment, bedishonoured, does not dispense with thenecessity for presentment.

Dishonour by 47. (1) A bill is dishonoured bynon-payment, non-payment—

(a) when it is duly presented for paymentand payment is refused or cannotbe obtained, or

(b) when presentment is excused and thebill is overdue and unpaid.

(2) Subject to the provisions of thisOrdinance, when a bill is dishonoured bynon-payment, an immediate right ofrecourse against the drawer and indorsersaccrues to the holder.

48. Subject to the provisions of thisOrdinance when a bill has beendishonoured by non-acceptance or by non-payment, notice of dishonour must be givento the drawer and each indorser, and anydrawer or indorser to whom such notice isnot given is discharged :

Notice ofdishonour andeffect ofnon-notice.

Provided that—

(a) where a bill is dishonoured by non-acceptance, and notice of dishonouris not given, the rights of a holderin due course subsequently to theomission, shall not be prejudiced bythe omission;

(b) where a bill is dishonoured by non-acceptance and due notice ofdishonour is given, it shall not benecessary to give notice of asubsequent dishonour by non-payment unless the bill shall in themeantime have been accepted.

49. Notice of dishonour in order to be Rules as tovalid and effectual must be given in notice ofaccordance with the following rules:— dishonour

(1) The notice must be given by or onbehalf of the holder, or by or onbehalf of an indorser who, at thetime of giving it, is himself liable onthe bill.

(2) Notice of dishonour may be given byan agent, either in his own name orin the name of any party entitled togive notice, whether that party behis principal or not.

(3) Where the notice is given by or onbehalf of the holder, it enures forthe benefit of all subsequent holdersand all prior indorsers who-have aright of recourse against the partyto whom it is given.

(4) Where notice is given by or on behalfof an indorser entitled to give noticeas hereinbefore provided, it enuresfor the benefit of the holder and allindorsers subsequent to the party towhom notice is given.

(5) The notice may be given in writing orby personal communication, andmay be given in any terms whichsufficiently identify the bill, andintimate that the bill has beendishonoured by non-acceptance ornon-payment. ' • •

(6) The return of a dishonoured bill tothe drawer or an indorser is, inpoint of form, deemed a sufficientnotice of dishonour.

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(7) A written notice need not be signed,and an insufficient written noticemay be supplemented and validatedby verbal communication. Amisdescription of the bill shall notvitiate the notice unless the party towhom the notice is given is in factmisled thereby,

(8) Where notice of dishonour is requiredto be given to any person, it may begiven either to the party himself, orto his agent in that behalf.

(9) When the drawer or indorser is dead,and the party giving notice knowsit, the notice must be given to apersonal representative if such therebe and with the exercise ofreasonable diligence he can befound.

(10) Where the drawer or indorser isinsolvent or bankrupt, notice maybe given either to the party himselfor to the assignee or trustee.

(11) Where there are two or moredrawers or indorsers who are notpartners, notice must be given toeach of them, unless one of themhas authority to receive such noticefor the others.

(12) The notice may by given as soon asthe bill is dishonoured, and must begiven within a reasonable timethereafter.

In the absence of special circumstancesnotice is not deemed to have beengiven within a reasonable time,unless—

(a) where the person giving and theperson to receive notice residein the same place, the notice isgiven or sent off in time toreach the latter on the dayafter the dishonour of the bill; y

(b) where the person giving and theperson to receive notice residein different places, the notice issent off on the day after thedishonour of the bill, if there

be a post at a convenient houron that day, and if there be nosuch post on that day then bythe next post thereafter.

(13) Where a bill when dishonoured is inthe hands of an agent, he mayeither himself give notice to thepanics liable on the bill or he maygive notice to his principal. If hegive notice to his principal, he mustdo so within the same time as if hewere the holder, and the principalupon receipt of such notice hashimself the same time for givingnotice as if the agent had been anindependent holder.

(14) Where a party to a bill receives duenotice of dishonour, he has after thereceipt of such notice the sameperiod of time for giving notice toantecedent parties that the holderhas after the dishonour.

(15) Where a notice of dishonour is dulyaddressed and posted, the sender isdeemed to have given due notice ofdishonour, notwithstanding anymiscarriage by the post office.

of dishonour is dispensed

(a) when, after the exercise of reasonablediligence, notice as required by thisOrdinance cannot be given to ordoes not reach the drawer orindorser sought to be charged ;

(b) by waiver express or implied. Noticeof dishonour may be waived beforethe time of giving notice hasarrived, or after the omission togive due notice;

50. (1) Delay in giving notice ofdishonour is excused where the delay iscaused by circumstances beyond the controlof the party giving notice, and notimputable to his default, misconduct, ornegligence. When the cause of delay ceasesto operate the notice must be given withreasonable diligence.

(2) Noticewith—

Excuses fordelay in givingnotice ofdishonour,

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Cap. 92] BILLS OF EXCHANGE

(c) as regards the drawer in the following a foreign bill, protest thereof in case ofcases, namely— dishonour is unnecessary.

Noting inlandbill.

(i) where, drawer and drawee are thesame person,

(ii) where the drawee is a fictitiousperson or a person not havingcapacity to contract,

(iii) where the drawer is the personto whom the bill is presentedfor payment,

(iv) where the drawee or acceptor isas between himself and thedrawer under no obligation toaccept or pay the bill,

(v) where the-- drawer hascountermanded payment;

(d) as regards the indorser in thefollowing cases, namely—

(i) where the drawee is a fictitiousperson or a person not havingcapacity to contract, and theindorser was aware of the factat the time he indorsed thebill,

(ii) where the indorser is the personto whom the bill is presentedfor payment,

(iii) where the bill was accepted ormade for his accommodation.

51. (1) Where an inland bill has beendishonoured it may, if the holder think fit,be noted for non-acceptance or non-payment, as the case may be; but it shallnot be necessary to note or protest any suchbill in order to preserve the recourse againstthe drawer or indorser.

(2) Where a foreign bill, appearing on theface of it to be such, has been dishonouredby non-acceptance it must be duly protestedfor non-acceptance, and where such a billwhich has not been previously dishonouredby non-acceptance, is dishonoured by non-payment, it must be duly protested for non-payment. If it be not so protested thedrawer and indorsers are discharged. Wherea bill does not appear on the face of it to be

(3) A bill which has been protested fornon-acceptance may be subsequentlyprotested for non-payment.

(4) Subject to the provisions of thisOrdinance, when a bill is noted or protested,it may be noted on the day of its dishonourand must be noted not later than the nextsucceeding business day. When a bill hasbeen duly noted, the protest may besubsequently extended as of the date of thenoting.

(5) Where the acceptor of a bill becomesbankrupt or insolvent or suspends paymentbefore it matures, the holder may cause thebill to be protested for better securityagainst the drawer and indorsers.

(6) A bill must be protested at the placewhere it is dishonoured :

Provided that—(a) when a bill is presented through the

post office, and returned by postdishonoured, it may be protested atthe place to which it is returned andon the day of its return if receivedduring business hours, and if notreceived during business hours, then

. not later than the next businessday;

(b) when a bill drawn payable at theplace of business or residence ofsome person other than the draweehas been dishonoured by non-acceptance, it must be protested fornon-payment at the place where it isexpressed to be payable, and nofurther presentment for payment to,or demand on, the drawee isnecessary.

(7) A protest must contain a copy of thebill, and must be signed by the notarymaking it, and must specify—

(a) the person at whose request the bill is protested;

(b) the place and date of protest, thecause or reason for protesting thebill, the demand made, and theanswer given, if any, or the fact thatthe drawee or acceptor could not befound.

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BILLS OF EXCHANGE [Cap. 92

Duties of 52. (1) When a bill is accepted generallyholder as presentment for payment is not necessary inregards drawee , , , . . r 1.1or acceptor, order to render the acceptor liable.

(8) Where a bill is lost or destroyed, or iswrongly detained from the person entitledto hold it, protest may be made on a copyor written particulars thereof.

(9) Protest is dispensed with by anycircumstance which would dispense withnotice of dishonour. Delay in noting orprotesting is excused when the delay iscaused by circumstances beyond the controlof the holder, and not imputable to his.default, misconduct, or negligence. Whenthe cause of,delay ceases to operate the billmust be noted or protested with reasonablediligence.

(2) When by the terms of a qualifiedacceptance presentment for payment isrequired, the acceptor, in the absence of anexpress stipulation to that effect, is notdischarged by the omission to present thebill for payment on the day that it matures.

(3) In order to render the acceptor of abill liable it is not necessary to protest it, orthat notice of dishonour should be given tohim.

(4) Where the holder of a bill presents itfor payment, he shall exhibit the bill to theperson from whom he demands payment,and when a bill is paid the holder shallforthwith deliver it up to the party paying it.

(a) the existence of the drawer, thegenuineness of his signature,and his capacity and authorityto draw the bill;

(b) in the case of a bill payable todrawer's order, the thencapacity of the drawer toindorse, but not thegenuineness or validity of hisindorsement;

(c) in the case of a bill payable tothe order of a third person,the existence of the payee andhis then capacity to indorse,but not the genuineness orvalidity of his indorsement.

55. (1) The drawer of a bill by drawing it— Liability ofdrawer.

(a) engages that on due presentment itshall be accepted and paidaccording to its tenor, and that if itbe dishonoured he will compensatethe holder or any indorser who iscompelled to pay it, provided thatthe requisite proceedings ondishonour be duly taken;

(b) is precluded'from denying to a holderin due course the existence of thepayee and his then capacity toindorse.

(2) The indorser of a bill, by indorsing it-LIABILITIES OF PARTIES

Funds in hands 53. A bill, of itself, does not operate asof drawee. an assignment of funds in the hands of the

drawee available for the payment thereof,and the drawee of a bill who does not acceptas required by this Ordinance is not liableon the instrument.

Liability ofacceptor.

54. The acceptor of a bill, by acceptingit-

(1) engages that he will pay it accordingto the tenor of his acceptance ;

(2) is precluded from denying to a holderin due course—

(a) engages that on due presentment itshall be accepted and paidaccording to its tenor, and that if itbe dishonoured he will compensatethe holder or a subsequent indorserwho is compelled to pay it,provided that the requisiteproceedings on dishonour be dulytaken; •

(b) is precluded from denying to a holderin due course the genuineness andregularity in all respects of thedrawer's signature and all previousindorsements •

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Cap. 92] BILLS OF EX CHANGE

Strangersigning billliable asindorser.

Measure ofdamagesagainst partiesto dishonouredbill.

(c) is precluded from denying to hisimmediate or a subsequent indorseethat the bill was at the time of hisindorsement a valid and subsistingbill, and that he had then a goodtitle thereto.

56. Where a person signs a billotherwise than as drawer or acceptor, hethereby incurs the liabilities of an indorserto a holder in due course.

57. Where a bill is dishonoured, themeasure of damages, which shall be deemedto be liquidated damages, shall be asfollows:—

(1) The holder may recover from anyparty liable on the bill, and thedrawer who has been compelled topay the bill may recover from theacceptor, and an indorser who hasbeen compelled to pay the bill mayrecover from the acceptor or fromthe drawer, or from a priorindorser—

(a) the amount of the bill;

(b) interest thereon from the timeof presentment for payment ifthe bill is payable on demand,and from the maturity of thebill in any other case ;

(c) the expenses of noting, or, whenprotest is necessary, and theprotest has been extended, theexpenses of protest.

(2) In the case of a bill which has beendishonoured abroad, in lieu of theabove damages, the holder mayrecover from the drawer, or anindorser, and the drawer or anindorser who has been compelled topay the bill may recover from anyparty liable to him the amount ofthe re-exchange with interestthereon until the time of payment.

(3) Where by this Ordinance interest maybe recovered as damages, suchinterest may, if justice require it, bewithheld wholly or in part, andwhere a bill is expressed to bepayable with interest at a given rate,interest as damages may or may notbe given at the same rate as interestproper.

58. (1) Where the holder of a bill Transferor bypayable to bearer negotiates it by delivery delivery and

-,, . - J - . 1 . ,, , transferee.without indorsing it, he is called a" transferor by delivery ".

(2) A transferor by delivery is not liableon the instrument.

(3) A transferor by delivery whonegotiates a bill thereby warrants to hisimmediate transferee being a holder forvalue that the bill is what it purports to be,that he has a right to transfer it, and that atthe time of transfer he is not aware of anyfact which renders it valueless.

DISCHARGES

59. (1) A bill is discharged by payment Payment inin due course by or on behalf of the drawee due course-or acceptor.

" Payment in due course " means paymentmade at or after the maturity of the bill tothe holder thereof in good faith and withoutnotice that his title to the bill is defective.

(2) Subject to the provisions hereinaftercontained, when a bill is paid by the draweror an indorser it is not discharged ; but—

(a) where a bill payable to, or to theorder of, a third party is paid by thedrawer, the drawer may enforcepayment thereof against theacceptor, but may not re-issue thebill;

(b) where a bill is paid by an indorser, orwhere a bill payable to drawer'sorder is paid by the drawer, theparty paying it is remitted to hisformer rights as regards theacceptor or antecedent parties, andhe may, if he thinks fit, strikeout his own and subsequentindorsements, and again negotiatethe bill.

(3) Where an accommodation bill is paidin due course by the party accommodatedthe bill is discharged.

60. (1) When a bill payable to order ondemand is drawn on a banker, and thebanker on whom it is drawn pays the bill ingood faith and in the ordinary course of

Banker payingdemand draftwhereonindorsement isforged.

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[§2.25 of1957.]

Acceptor theholder atmaturity.

Expresswaiver orrenunciation.

Cancellation.

business, it is not incumbent on the bankerto show that the indorsement of the payeeor any subsequent indorsement was madeby or under the authority of the personwhose indorsement it purports to be, andthe banker is deemed to have paid the bill indue course, although such indorsement hasbeen forged or made without authority.

(2) The provisions of subsection (1) shallapply to a banker's draft as if that draftwere a bill referred to in that subsection.

In this subsection " banker's draft" hasthe same meaning as in section 84.

61. When the acceptor of a bill is orbecomes the holder of it at or after itsmaturity, in his own right, the bill isdischarged.

62. (1) When the holder of a bill ator after its maturity absolutely andunconditionally renounces his rights againstthe acceptor the bill is discharged.

The renunciation must be in writing,unless the bill is delivered up to theacceptor.

(2) The liabilities of any party to a billmay in like manner be renounced by theholder before, at, or after its maturity, butnothing in this section shall affect the rightsof a holder in due course without notice ofthe renunciation.

63. (1) Where a bill is intentionallycancelled by the holder or his agent, and thecancellation is apparent thereon, the bill isdischarged.

(2) In like manner any party liable on abill may be discharged by the intentionalcancellation of his signature by the holderor his agent. In such case any indorser whowould have had a right of recourse againstthe party whose signature is cancelled is alsodischarged.

(3) A cancellation made unintentionally,or under a mistake, or without the authorityof the holder, is inoperative; but where abill or any signature thereon appears tohave been cancelled, the burden of proof lieson the party who alleges that thecancellation was made unintentionally, orunder a mistake, or without authority.

64, (1) Where a bill or acceptance is Alteration ofmaterially altered without the assent of all bill.parties liable on the bill, the bill is avoided',except as against a party who has himselfmade, authorized, or assented to thealteration, and subsequent indorsers;

Provided that where a bill has beenmaterially altered, but the alteration is notapparent, and the bill is in the hands of aholder in due course, such holder may availhimself of the bill as if it had not beenaltered; and may enforce payment of itaccording to its original tenor.

(2) In particular the following alterationsare material, namely, any alteration of thedate, the sum payable, the time of payment,the place of payment, and, where a bill hasbeen accepted generally, the addition of aplace of payment without the acceptor'sassent.

ACCEPTANCE AND PAYMENT FOR HONOUR

65. (1) Where a bill of exchange has Acceptance forbeen protested for dishonour by non- honour supra'acceptance, or protested for better security, protest.and is not overdue, any person, not being aparty already liable thereon, may, with theconsent of the holder, intervene and acceptthe bill supra protest, for the honour of anyparty liable thereon, or for the honour ofthe person for whose account the bill isdrawn.

(2) A bill may be accepted for honour forpart only of the sum for which it is drawn.

(3) An acceptance for honour supraprotest in order to be valid must—

(a) be written on the bill, and indicatethat it is an acceptance for honour;

(b) be signed by the acceptor for honour.

(4) Where an acceptance for honour doesnot expressly state for whose honour it ismade, it is deemed to be an acceptance for

the honour of the drawer.

(5) Where a bill payable after sight isaccepted for honour, its maturity iscalculated from the date of the noting fornon-acceptance, and not from the date ofthe acceptance for honour,

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Liability ofacceptor forhonour.

Presentment toacceptor forhonour.

Payment forHonour supraprotest.

66. (1) The acceptor for honour of a billby accepting it engages that he will, on duepresentment, pay the bill according to thetenor of his acceptance, if it is not paid bythe drawee, provided it has been dulypresented for payment, and protested fornon-payment, and that he receives notice ofthese facts-

(2) The acceptor for honour is liable tothe holder and to all parties to the billsubsequent to the party for whose honourhe has accepted.

67. (1) Where a dishonoured bill hasbeen accepted for honour supra protest, orcontains a reference in case of need, it mustbe protested for non-payment before it ispresented for payment to the acceptor forhonour, or referee in case of need.

(2) Where the address of the acceptor forhonour is in the same place where the bill isprotested for non-payment, the bill must bepresented to him not later than the dayfollowing its maturity; "and where theaddress of the acceptor for honour is insome place other than the place where it wasprotested for non-payment, the bill must beforwarded not later than the day followingits maturity for presentment to him.

(3) Delay in presentment or non-presentment is excused by any circumstancewhich would excuse delay in presentmentfor payment or . non-presentment forpayment.

(4) When a bill of exchange isdishonoured by the acceptor for honour itmust be protested for non-payment by him.

68. (1) Where a bill has been protestedfor non-payment, any person may interveneand pay it supra protest for the honour ofany party liable thereon, or for the honourof the person for whose account the bill isdrawn.

(2) Where two or more persons offer topay a bill.for the honour of different parties,the person whose payment will dischargemost parties to the bill shall have thepreference.

(3) Payment for honour supra protest, inorder to operate as such and not as a merevoluntary payment, must be attested by anotarial act of honour which may beappended to the protest or form anextension of it.

(4) The notarial act of honour must befounded on a declaration made by the payerfor honour, or his agent in that behalf,declaring his intention to pay the bill forhonour, and for whose honour he pays.

(5) Where a bill has been paid forhonour, all parties subsequent to the partyfor whose honour it is paid are discharged,but the payer for honour is subrogated for,and succeeds to both the rights and dutiesof, the holder as regards the party for whosehonour he pays, and all parties liable to thatparty.

(6) The payer for honour on paying tothe holder the amount of the bill and thenotarial expenses incidental to its dishonouris entitled to receive both the bill itself andthe protest. If the holder do not on demanddeliver them up he shall be liable to thepayer for honour in damages.

(7) Where the holder of a bill refuses toreceive payment supra protest he shall losehis right of recourse against any party whowould have been discharged by suchpayment.

LOST INSTRUMENTS

69. Where a bill has been lost before it is Holder's rightoverdue, the person who was the holder of it to duplicate of, , . , . • r may apply to the drawer to give him lost bill.another bill of the same tenor, givingsecurity to the drawer if required toindemnify him against all persons whateverin case the bill alleged to have been lostshall be found again.

If the drawer on request as aforesaidrefuses to give such duplicate bill, he may becompelled to do so.

70. In any action or proceeding upon a Action on lostbill, the court or a judge may order that the bi11-loss of the instrument shall not be set up,provided an indemnity be given to the

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Rules as tosets.

Rules wherelaws conflict,

satisfaction of the court or judge against theclaims of any other person upon theinstrument in question.

BILL IN A SET

71. (1) Where a bill is drawn in a set,each part of the set being numbered, andcontaining a reference to the other parts, thewhole of the parts constitute one bill.

(2)Where the holder of a set indorses twoor more parts to different persons, he isliable on every such part, and every indorsersubsequent to him is liable on the part hehas himself indorsed as if the said parts wereseparate bills.

(3) Where two or more parts of a set arenegotiated to different holders in duecourse, the holder whose title first accrues isas between such holders deemed the trueowner of the bill; but nothing in thissubsection shall affect the rights of a personwho in due course accepts or pays the partfirst presented to him.

(4) The acceptance may be written on anypart, and it must be written on one partonly.

If the drawee accepts more than one part,and such accepted parts get into the handsof different holders in due course, he is

'liable on every such part as if it were aseparate bill.

(5) When the acceptor of a bill drawn ina set pays it without requiring the partbearing his acceptance to be delivered up tohim, and that part at maturity isoutstanding in the hands of a holder in duecourse, he is liable to the holder thereof.

(6) Subject to the preceding rules, whereany one part of a bill drawn in a set isdischarged by payment or otherwise thewhole bill is discharged.

CONFLICT OF LAWS

72. Where a bill drawn in one country isnegotiated, accepted, or payable in another,the rights, duties, and liabilities of theparties thereto are determined as follows ;—

(1) The validity of a bill as regardsrequisites in form is determined bythe law of the place of issue, and

the validity as regards requisites inform of the supervening contracts,such as acceptance, or indorsement,or acceptance supra protest, isdetermined by the law of the placewhere such contract was made:

Provided that—

(a) where a bill is issued outside SriLanka it is not invalid byreason only that it is notstamped in accordance withthe law of the place of issue ;

(b) where a bill issued outside SriLanka conforms, as regardsrequisites in form, to the lawof Sri Lanka, it may, for thepurpose of enforcing paymentthereof, be treated as valid asbetween all persons whonegotiate, hold, or becomeparties to it in Sri Lanka.

(2) Subject to the provisions of thisOrdinance, the interpretation of thedrawing, indorsement, acceptance,or acceptance supra protest of abill, is determined by the law of theplace where such contract is made:

Provided that where an inland bill isindorsed in a foreign country theindorsement shall as regards thepayer be interpreted according tothe law of Sri Lanka.

(3) The duties of the holder with respectto presentment for acceptance orpayment and the necessity for orsufficiency of a protest or notice ofdishonour or otherwise, aredetermined by the law of the placewhere the act is done or the bill isdishonoured.

(4) Where a bill is drawn out of butpayable In Sri Lanka, and the sumpayable is not expressed in the

* currency of Sri Lanka, the amountshall, in the absence of someexpress stipulation, be calculatedaccording to the rate of exchangefor sight drafts at the place ofpayment on the day the bill ispayable.

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Chequedefined.

Presentmentof chequefor payment.

Revocation ofbanker'sauthority.

(5) Where a bill is drawn in one countryand is payable in another, the duedate thereof is determinedaccording to the law of the placewhere it is payable,

PART III

CHEQUES ON A BANKER

73. A cheque is a bill of exchange drawnon a banker payable on demand.

Except as otherwise provided in this Part,the provisions of this Ordinance applicableto a bill of exchange payable on demandapply to a cheque.

74. Subject to the provisions of thisOrdinance—

(1) Where a cheque is not presented forpayment within a reasonable timeof its issue, and the drawer or theperson on whose account it isdrawn had the right at the time ofsuch presentment as between himand the banker to have the chequepaid and suffers actual damagethrough the delay, he is dischargedto the extent of such damage, thatis to say, to the extent to whichsuch drawer or person is a creditorof such banker to a larger amountthan he would have been" had suchcheque been paid.

(2) In determining what is a reasonabletime regard shall be had to thenature of the instrument, the usageof trade and of bankers, and thefacts of the particular case.

(3) The holder of such cheque as to whichsuch drawer or person is dischargedshall be a creditor, in lieu of suchdrawer or person, of such banker tothe extent of such discharge, andentitled to recover the amount fromhim.

75. The duty and authority of a bankerto pay a cheque drawn on him by hiscustomer are determined by—

General andspecialcrossingsdefined.[§4, 30 of1961.]

(a) countermand of payment;

(b) notice of the customer's death.

CROSSED CHEQUES

76. (1) Where a cheque bears across itsface an addition of two parallel transverselines, either with or without the words

"not negotiable", thataddition constitutes a crossing and thecheque is crossed generally.

(2) Where a cheque bears across its facean addition of the name of a banker, eitherwith or without the words " not negotiable", that addition constitutes a crossing, and the cheque is crossed speciallyand to that banker.

[§ 4, 30 of1961.1

77. (1) A cheque may be crossed Crossing bygenerally or specially by the drawer, drawer or6 -' • •' •• after issue.

(2) Where a cheque is uncrossed, theholder may cross it generally or specially.

(3) Where a cheque is crossed generally,the holder may cross it specially.

(4) Where a cheque is crossed generally [ § 5,30 ofor specially, the holder may add the words 1961-] " not negotiable ".

(5) Where a cheque is crossed specially,the banker to whom it is crossed may againcross it specially to another banker forcollection.

(6) Where an uncrossed cheque or acheque crossed generally is sent to a bankerfor collection, he may cross it specially tohimself.

78. A crossing authorized by thisOrdinance is a material part of the cheque ;it shall not be lawful for any person toobliterate, or, except as authorized by this

•Ordinance, to add to or alter the crossing.

79. (1) Where a cheque is crossedspecially to more than one banker, exceptwhen crossed to an agent for collectionbeing a banker, the banker on whom it isdrawn shall refuse payment thereof.

Crossing amaterial partof cheque.

Duties ofbanker -as tocrossedcheque.

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Protection tobanker anddrawer wherecheque iscrossed.

Effect ofcrossing withwords" not " not negotiable ", he shall

negotiable"on holder.

11[§6.30 of1961.]

Protection tocollectingbanker.

(2) Where the banker on whom a chequeis drawn which is so crossed neverthelesspays the same, or pays a cheque crossedgenerally otherwise than to a banker, or ifcrossed specially otherwise than to thebanker to whom it is crossed, or his agentfor collection being a banker, he is liable tothe true owner of the cheque for any loss hemay sustain owing to the cheque havingbeen so paid:

Provided that where a cheque is presentedfor payment which does not at the time ofpresentment appear to be crossed, or tohave had a crossing which has beenobliterated, or to have been added to oraltered otherwise than as authorized by thisOrdinance, the banker paying the cheque ingood faith and without negligence shall notbe responsible or incur any liability, norshall the payment be questioned by reasonof the cheque having been crossed, or of thecrossing having been obliterated or havingbeen added to or altered otherwise than asauthorized by this Ordinance, and ofpayment having been made otherwise thanto a banker or to the banker to whom thecheque is or was crossed, or to his agent forcollection being a banker, as the case maybe.

80. Where the banker on whom acrossed cheque is drawn, in good faith andwithout negligence pays it, if crossedgenerally, to a banker, and if crossedspecially, to the banker to whom it iscrossed, or his agent for collection, being abanker, the banker paying the cheque, and,if the cheque has come into the hands of thepayee, the drawer, shall respectively beentitled to the same rights and be placed inthe same position as if payment of thecheque had been made to the true ownerthereof.

81. Where a person takes a crossedcheque which bears on it the words

not have and shall not be capable of givinga better title to the cheque than that whichthe person from whom he took it had.

82. (1) Where a banker in good faithand without negligence receives payment fora customer of a cheque crossed generally or

Extension ofsections 76 to82 to certaindrafts onbankers.

specially to himself, and the customer hasno title or a defective title thereto, thebanker shall not incur any liability to thetrue owner of the cheque by reason only ofhaving received such payment.

(2) A banker receives payment of acrossed cheque for a customer within themeaning of this section notwithstanding thathe credits his customer's account with theamount of the cheque before receivingpayment thereof.

83. Sections 76 to 82, both inclusive, ofthis Ordinance shall extend to anydocument issued by a customer of anybanker, and intended to enable any personor body corporate to obtain payment fromsuch banker of the sum mentioned in suchdocument, and shall so extend in likemanner as if the said document were acheque:

Provided that nothing in this Ordinanceshall be deemed to render any suchdocument a negotiable instrument.

For the purpose of this section, theDeputy Secretary to the Treasury shall bedeemed to be a banker, and the publicofficers drawing on him shall be deemedcustomers.

84. Sections 76 to 82, both inclusive, ofthis Ordinance shall apply to a banker'sdraft as if that draft were a cheque.

For the purposes of this section, theexpression " banker's draft" means a draftpayable on demand drawn by or on behalfof a bank upon itself, whether payable atthe head office or some other office of thebank.

PART IV

' PROMISSORY NOTES

85. (1) A promissory note is an Promissoryunconditional promise in writing made by note defined.one person to another signed by the maker,engaging to pay, on demand or at a fixed or .determinable future time, a sum certain inmoney, to,- or to the order of, a specifiedperson or to bearer.

Applicationof sections76 to 82 todrafts drawnby a bank onitself.

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Deliverynecessary.

Joint andseveral notes.

Note payableon demand.

Presentment ofnote forpayment torender makerliable.

(2) An instrument in the form of a notepayable to maker's order is not a notewithin the meaning of this section, unlessand until it is indorsed by the maker.

(3) A note is not invalid by reason onlythat it contains also a pledge of collateralsecurity with authority to sell or disposethereof.

(4) A note which is, or on the face of itpurports to be, both made and payablewithin Sri Lanka is an inland note. Anyother note is a foreign note.

86. A promissory note is inchoate andincomplete until delivery thereof to thepayee or bearer.

87. (1) A promissory note may be madeby two or more makers, and they may beliable thereon jointly, or jointly andseverally, according to its tenor.

(2) Where a note runs " I promise topay " and is signed by two or more persons,it is deemed to be their joint and severalnote.

88. (1) Where a note payable ondemand has been indorsed, it must bepresented for payment within a reasonabletime of the indorsement. If it be not sopresented the indorser is discharged.

(2) In determining what is a reasonabletime, regard shall be had to the nature ofthe instrument, the usage of trade, and thefacts of the particular case.

(3) Where a note payable on demand isnegotiated, it is not deemed to be overdue,.for the purpose of affecting the holder withdefects of title of which he had no notice, byreason that it appears that a reasonable timefor presenting it for payment has elapsedsince its issue.

89. (1) Where a promissory note is inthe body of it made payable at a particularplace, it must be presented for payment atthat place in order to render the makerliable. In any other case, presentment forpayment is not necessary in order to renderthe maker liable.

91. (1) Subject to the provisions in this Application ofPart. and except as by this section provided, part II to. the provisions of this Ordinance relating to notesbills of exchange apply, with the necessarymodifications, to promissory notes.

(2) Presentment for payment is necessaryin order to render the indorser of a noteliable.

(3) Where a note is in the body of it madepayable at a particular place, presentment atthat place is necessary in order to render anindorser liable; but when a place ofpayment is indicated by way ofmemorandum only, presentment at thatplace is sufficient to render the indorserliable, but a presentment to the makerelsewhere, if sufficient in other respects,shall also suffice.

90. The maker of a promissory note by Liability ofmaking it— maker-

(a) engages that he will pay it accordingto its tenor;

(b) is precluded from denying to a holderin due course the existence of thepayee and his then capacity toindorse.

(2) In applying those provisions themaker of a note shall be deemed tocorrespond with the acceptor of a bill, andthe first indorser of a note shall be deemedto correspond with the drawer of anaccepted bill payable to drawer's order.

(3) The following provisions as to bills donot apply to notes, namely, provisionsrelating to—

(a) presentment for acceptance;

(b) acceptance;

•(c) acceptance supra protest;

(d) bills in a set.

(4) Where a foreign note is dishonoured,protest thereof is unnecessary.

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Good faith.

PART V

SUPPLEMENTARY

92. A thing is deemed to be done ingood faith within the meaning of thisOrdinance, where it is in fact done honestly,whether it is done negligently or not.

96. Where a dishonoured bill or note is Protest whenauthorized or required to be protested, and notary notthe services of a notary cannot be obtained accessible.at the place where the bill is dishonoured,any householder or substantial resident of -the place may, in the presence of twowitnesses, give a certificate, signed by them,attesting the dishonour of the bill, and thecertificate shall in all respects operate as if itwere a formal protest of the bill.

Signature.

Compulationof time.

When notingequivalent toprotest.

93. (1) Where, by this Ordinance, anyinstrument or writing is required to besigned by any person, it is not necessary thathe should sign it with his own hand, but it issufficient if his signature is written thereonby some other person by or under hisauthority.

(2) In the case of a corporation, where,by this Ordinance, any instrument orwriting is required to be signed, it issufficient if the instrument or writing besealed with the corporate seal.

But nothing in this section shall beconstrued as requiring the bill or note of acorporation to be under seal.

94. Where, by this Ordinance, the timelimited for doing any act or thing is lessthan three days, in reckoning time, non-business days are excluded.

" Non-business days " for the purposes ofthis Ordinance mean—

(a) a bank holiday;

(b) a day appointed to be a publicholiday by or under any law for thetime being in force.

Any other day is a business day.

95. For the purposes of this Ordinance,where a bill or note is required to beprotested within a specified time or beforesome further proceeding is taken, it issufficient that the bill has been noted forprotest before the expiration of the specifiedtime or the taking of the proceeding; andthe formal protest may be extended at anytime thereafter as of the date of the noting.

Dividendwarrants maybe crossed.

The form given in the Schedule to thisOrdinance may be used with necessarymodifications, and if used shall be sufficient.

97. The provisions of this Ordinance asto crossed cheques shall apply to a warrantfor payment of dividend.

98. (1) The rules in insolvency or Savings.bankruptcy relating to bills of exchange,promissory notes, and cheques shallcontinue to apply thereto, notwithstandinganything in this Ordinance contained.

(2) The rules of the common law ofEngland, including the law merchant,save in so far as they are inconsistent with.the express provisions of this Ordinance, orany other enactment for the time being inforce, shall apply to bills of exchange, 'promissory notes, and cheques.

(3) Nothing in this Ordinance or in anyrepeal effected thereby shall affect—

(a) any law or enactment for the timebeing in force relating to stamps orthe revenue;

(b) the provisions of the CompaniesOrdinance,* or enactmentsamending it, or any enactmentrelating to joint stock banks orcompanies;

(c) the provisions relating to promissorynotes contained in the MoneyLending Ordinance;

(d) the validity of any usage relating todividend warrants or theindorsement thereof.

* Repealed and replaced by the Companies Act, No. 17 of 1982.IV/183


SCHEDULE

[Section 96.] FORM OF PROTEST WHICH MAY BE USED WHEN THE SERVICES OF A NOTARYCANNOT BE OBTAINED

Know all men that I. A. B. (householder), o f . . . . . . . . . . . . . . . . . . . in the district of . . . . . . . . . . . . . . . . . . . in SriLanka, at the request of C. D., there being no notary public available, did on t h e . . . . . . . . . . . . . . . . . -dayof . . . . . . . . . . . . . . . . . . . 19...., a t . . . . . . . . . . . . . . . . . . . demand payment (or acceptance) of the bill of exchangehereunder written, from E. F; to which demand he made answer (state answer, if any), wherefore I now in thepresence of G. H. and ./. K. do protest the said bill of exchange.

(Signed) A.B.

G. H. ]J . K . ]

Witnesses.

MB.—The bill itself should be annexed, or a copy of the bill and all that is written thereon should beunderwritten.

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chapter 92 bills of exchange force;

Documents