Download - Topik 5 Instrumen Boleh Niaga
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
1/36
A M I N U R A S Y E D B I N M A H P O P
F A C U L T Y O F L A W
U N I V E R S I T I K E B A N G S A A N M A L A Y S I A
1
NEGOTIABLE
INSTRUMENTS
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
2/36
CONTENTS2
Negotiable Instruments
Bills of Exchange
Cheques
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
3/36
NEGOTIABLE INSTRUMENTS3
Monetary instruments facilitate trade and commerce
A formal legal document which contains a legal
obligation to pay money and which possesses theattributes of negotiability.
Negotiability: a form of transfer of property
(ownership) from one person to another in adocument evidencing a contractual obligation to paymoney.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
4/36
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
5/36
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
6/36
TERM6
Drawer: A person who draws a bill (Customer)
Drawee: A person on whom it is drawn (Bank)
Payee: Person to whom the bill is drawn payable
Acceptor: When the drawee accepts a bill (bank).
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
7/36
CHARACTERISTICS OF BOE7
Unconditional Order
In writing
Addressed by one person to another
Signed by the person giving it To pay on demand or at a fixed or determinable
future time
A sum certain in money To or to the order of specified person or to bearer
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
8/36
UNCONDITIONAL ORDER8
Must be unconditional.
Palmer v Pratt
An order to pay at 30 days after the arrival of the ship wasconditional.
See also Cooperative Exportvereniging Vecofa UA
V Maha Syndicate [1970] 1 mlj 187
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
9/36
IN WRITING9
S3 MIA 1967: Printing, photography and any othermode of representing words in visible form.
May be drawn in any language
SeeArab Bank Ltd. v Ross [1952] 2 QB 216
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
10/36
ADDRESSED BY ONE PERSON TO ANOTHER
10
Drawer (customer) to drawee (banker)
Bank drafts drawn by a bank on itself are not BOE
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
11/36
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
12/36
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
13/36
TO OR TO THE ORDER OF SPECIFIED PERSONOR TO BEARER
13
To specified person: Must be named and certain
To bearer: simply paid to the bearer without
requiring proof of identity.
cash or order
Account payee only: a cheque can only be paid intothe account of the person name on the cheque, thepayee.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
14/36
CHEQUES14
A document/instrument that orders a payment ofmoney from a bank account.
BOE 1949: A BOE drawn on a banker payable ondemand.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
15/36
ISSUING CHEQUES15
Section 2-- issue means the first delivery of a bill complete inform, to a person who takes it as a holder.
Mere signing and fills in the blanks, not a valid cheque. Section 2 defines holder as the payee or indorse of a bill who
is in possession of it/bearer. Payee is the person to whom the cheque is drawn payable Indorse is the person to whom the cheese is made payable by
a special indorsement. Section 2 defines delivery- transfer of possession,
actual/constructive from one person to another Section 21(2)- delivery may be conditional or for a special
purpose only. It is not for the purpose of transferring theproperty in the cheque.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
16/36
DATING A CHEQUE16
No legal requirement
In practice, the drawee refuses to pay and return it
with the answer date required.
Antedated cheque: Bears a date before the date ofissue.
Postdated cheque: dated later than the date of issue.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
17/36
POSTDATED CHEQUE17
It is a valid BOE and capable of being transferred.
Lien Chung Credit & Leasing Sdn Bhd v Chang ChinChoi[1994] 3 MLJ 488
Postdated cheque RM35K as a security for the loan. Postdated cheque was not a cheque (not payable on demand).
It was not a security.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
18/36
NEGOTIATION OF CHEQUES18
If there is word only- the cheques are incapable ofnegotiation
Section 8(4)- a cheque payable simply to a specifiedperson without the addition of the words or order is
negotiable in the usual way Section 81A : a cheque crossed account payee/AC payee
shall not be transferable but shall only be valid betweenthe parties.
Section 31(1)i. Payable to bearer: negotiated by delivery aloneii. Payable to order: negotiated by the indorsement of the holder
completed by the delivery
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
19/36
CROSSING ON CHEQUES19
Construed as a request to the drawee bank toexercise caution in the payment of cheques.
General Crossing:- S76(1) a crossing 1. an addition to
a cheque 2. made across its face and by means of twoparallel transverse lines. Payment can made to another banker
Special Crossing- 1. an addition to a cheque 2.
comprising the name of a banker 3. with or withoutwords not negotiable. Payment can only be paid to the banker named in the crossing
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
20/36
A/C PAYEE CROSSING20
A cheque crossed account payee is non transferable.
Sole duty of a banker to pay an A/C payee chequeinto the named payees account.
If the collecting banker fails to observe this duty, it isconsidered as negligent on the part of the bank.
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
21/36
CROSSING WITH THE WORDS A/CPAYEE ONLY
21
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
22/36
CROSSING WITH THE WORDS NOTNEGOTIABLE
22
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
23/36
INDORSEMENT23
Section 34(1) Blank indorsement Section 34(2) special indorsement Section 32(a) 82 of the Bills of Exchange Act the
signature of the holder or of his duly authorized agent isessential to the validity of indorsement
Section 32(b) partial indorsement, does not operate asnegotiation of an instrument
Section 32(d)- he may indorse the instrument asdescribed- he may add, if he thinks fit, his proper
signature See Arab Bank Ltd. v Ross [1952] Court of Appeal: the
omission of the word company made the indorsementirregular
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
24/36
WHAT IS INDORSEMENT?24
National Bank v Patterson (1909) a South Africancase attempts to define indorsement:
Every signature written on the back of such instrument is anindorsement
Ordinary legally meaning is the signing of a name on the backof an instrument (intention to take liabilities of an indorser)
Last-named sense followed by delivery
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
25/36
INDORSEMENT25
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
26/36
INDORSEMENT26
United Asian Bank Bhd v Tai Soon HengConstruction Sdn Bhd
Tai, was a customer to UAB and had opened an
account at UABsbranch in KL. UABs account clerkwho was not an authorized signatory to cheques,forged several cheques of Tai. All these cheques werehonoured by UAB and Tais account with itwas
debited in consequences. Tai brought an actionagainst UAB after forgery was discovered.
Issue: whether banker should be held liable?
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
27/36
27
Anuar J: a customer need to establish on balance ofprobabilities
Liability of a bank for payment on forgedinstruments of its customers is founded on the tort
off conversion, tort of strict liability Duties of a customer
a) to refrain from drawing a cheque which may facilitate forgery
b) to inform the banker of any forgery of a cheque as soon as the
customer becomes aware of it. Duty to inspect his periodical bank statements
Appeal dismissed
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
28/36
CHEQUES28
Section 2, 3 13, 20, 21, 31, 34, 35 & 73, 82 Bill of Exchange Act Lien Chung Credit & Leasing Sdn Bhd v Chang Chin Choi[1994] 3
MLJ 488 National Bank v Silke [1891] 1 QB 435 Arab Bank Ltd v Ross [1952] 2 QB 216
United Asian Bank Bhd v Tai Soon Heng Construction Sdn Bhd[1993] 1 MLJ 182 Marfani & Co Ltd v Midland Bank Ltd[1968] 2 ALL ER 573 Brown v Westminster Bank Ltd[1964] 2 Lloyds Rep 187 Tina Motors Pty Ltd v Australia & New Zealand Banking Group
Ltd[1977] VR 205 Syarikat Islamiyyah v Bank Bumiputra Malaysia Bhd[1988] 3
MLJ 218 Tai Hing Cotton Mill Ltd Liu Chong Hing Bank Ltd[1985] 3 WLR
317
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
29/36
CHEQUES29
Holder of a Cheque
Section 2, 34, 77, 69, 35, 38 (a), 49 Bill of Exchange
Arab Bank Ltd v Ross [1952] 2 QB 216
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
30/36
CHEQUES30
Holder in Due Course
Section 24, 27, 29, 55, 95 Bill of Exchange
Re Jones v Waring and Gillow Ltd[1926] AC 670
Midland Bank Ltd v Reckitt[1933] AC 1
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
31/36
CHEQUES31
Defences to a Claim on a Cheque Section 27, 30, 74, 49, 50, 22, 21, 24, 64
Syarikat Islamiyyah v Bank Bumiputra Malaysia Bhd[1988] 3 MLJ 218
Kepitigalla Rubber Estates Ltd v National Bank of IndiaLtd[1909] 2 kb 1010
Tai Hing Cotton Mill Ltd v Liu Chong Hing Bank Ltd &Ors [1985] 2 Lloyds Rep 313
Greenwood v Martin Bank Ltd[1932] 1 KB 371 Bird & Co (London) Ltd v Thomas Cook & Son Ltd[1937]
2 ALL ER 227
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
32/36
CHEQUES32
Fraud
Section 17 Contracts Act 1950
Saunders (Excutrix of the Will of Rose Maude Gallie,
deceasd v Anglia Building Society [1971] AC 1004
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
33/36
CHEQUES33
Duress or Coercion
Section 16 Contracts Act 1950
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
34/36
CHEQUES34
Colletion of Cheque
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
35/36
CHEQUES35
Collecting Bankers Duties
-
7/28/2019 Topik 5 Instrumen Boleh Niaga
36/36
CHEQUES36
Claims by Third Parties against CollectingBankers
I. Claims at common law
II. Claims in equity