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Bill of Exchange
Contract Law (Ghana Institute of Management and Public Administration)
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In accordance with Section 1 of the Bill of Exchange Act, 1961 (Act 55), A bill of
exchange is an unconditional order in writing, addressed by one person to
another, signed by the person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or determinable future time a sum of
money to or to the order of a specified person or to bearer 1. Thus an instrument
which does not comply with the above definition or which orders an act to be done
in addition to the payment of money is not a bill of exchange 2. It is also worth
noting that subsection 3 of the section 1 provides that an order to pay out of a
particular fund is not unconditional within the meaning of subsection (1); but an
unqualified order to pay is unconditional if coupled with; an indication of a
particular fund out of which the drawee is to reimburse the drawee, or a particular
account to be debited with the amount, or; a statement of the transaction which
gives rise to the bill, is unconditional. However, a bill is not invalid because; it is
not dated; it does not specify the value given, or; it does not specify the place
where it is drawn or the place where it is payable.3
By an unconditional order, implies that there must be no qualification which would
make the payment uncertain or give rise to some cumbersome enquiries. As an
example, consider that a parent by name X in a bill specifies that a drawee – bank
pays based on a document, sums of money to his son Y when he passes the Ghana
bar exams; this would make the payment uncertain and give rise to a cumbersome
enquiry on the part of the drawee bank to determine whether or not the Y has
passed his exams. Thus by such words by the drawer X, the said document cannot
be a bill of exchange in the context of law.
1 Section 1(1) of the Bill of Exchange Act, 1961 (Act 55)
2 Section 1(2) of the Bill of Exchange Act, 1961 (Act 55)
3 Section 1(4) of the Bill of Exchange Act, 1961 (Act 55)
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The case of Bavins and Sims v. London and South Western Bank emphasizes
that an instrument which requires a condition of payment of a receipt by the payee
on the front or the reverse of the document is not a negotiable instrument. In the
said case for instance an instrument in the form of a cheque which was received by
the plaintiff read, Pay to … provided the receipt form at the foot is duly signed and
dated. This instrument was however stolen from the plaintiff, with an endorsement
on it and the receipt form signed. In an action by the plaintiff against the collecting
bank, the court held that the instrument contained a condition to be met before
same is paid, it cannot be said to be a cheque.
It must however be distinguished as was held in the cases of Nathan v. Odgen that
where a condition on the face of a cheque or embodied therein is not to be fulfilled
by the drawee bank but a direction to the payee, the said order remains
unconditional. Thus where a cheque is drawn in the ordinary form, requiring a
receipt on the back of it to be signed by the payee, such a requirement in so far as it
is directed to the said payee alone and not to the drawee bank, would suffice to
make the instrument an unconditional one.
Also for a written bill or cheque to be valid, it must be signed by the person given
it, that is the drawer or a person authorized by him or her, as held in the Ghanaian
case of Ackumey v. Kumah the ‘mark’ (say the thumbprint) of a person who is
illiterate is a satisfactory signature.
The section 1(1) of the Act also requires a bill or a cheque to be drawn or
negotiated for any sum of money in a certain sum usually expressed in words and
in figures. By this the sum of money expressed in words should be the same as the
sum written in figures. However according to section 7(2) of the Act (Act 55),
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where the sum of money payable is expressed in both words and in figures, and
there is discrepancy between the two, the sum denoted by the words is the amount
payable.
Moreover the requirement that a bill to be payable at a fixed period after date or
sight makes the makes the presence of date on a check a necessity, however, under
section 1(4) a bill is invalid because it is not dated. This is because if a bill is not
dated a holder may insert the ‘true date of issue’; and if the wrong date is inserted a
holder in due course may still obtain payment, on the date which should have been
inserted. And a holder in due course is a person who has received a negotiable
instrument in good faith and without notice that it is overdue, that there is any prior
claim, or that there is defect in the title of the person who negotiated it.
Furthermore, there is a requirement for an address by one person to another. For a
bill of exchange there must be a drawer who is usually a customer of a bank who
draws out the check or the negotiable instrument. The cheque or the bill must be
addressed to the drawee bank instructing the said drawee to pay the bearer or the
holder (payee) a certain sum of money4. By the payment of a sum of money by the
drawee bank to the payee, the bank discharges its debt to the drawer to the extent
of the payment made to payee.
On the face of the cheque in the given scenario, the cheque was dawn by Sarah
Adu-Afropong (the drawer) addressed to her bank which is Cledyth International
Bank, GIMPA Faculty of Law branch (as the drawee); instructing them to pay the
payee Monica Happy a sum of money which is not certain on the face of the
instrument. The cheque is duly signed by the drawer as required by law. Although
the amount in figures is GHC4,275.00 the amount in words reads Four thousand
4 Section 5 of the Act 55
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Two hundred and Seventy – Five Ghana Cedis, Twenty Pesewas. Although this
creates discrepancy in the amount that must be paid, section 7(2) of Act 55 as
stated above provides that where such discrepancies exists, the amount in words
must be paid.
Also on the face of the instrument is no date. The requirement that a bill to be
payable at a fixed period after date or sight may make on argue that absence of date
would make the bill invalid, however from Section 1(4) as explained above, the
absence of a date does not invalidate a bill, since the holder can at any time insert
the date.
With the given cheque satisfying the all the requirement of a valid bill of exchange,
it can be concluded that same is so valid.
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