BILLS OF EXCHANGE ORDINANCE

Arrangement of Sections

PART I

Preliminary

1. Short title.

2. Interpretation.

PART II

Bills of Exchange Form and Interpretation

3. Bill of exchange defined.

4. Inland and foreign bills.

5. Effect where different parties to bill are the same person.

6. Address to drawee.

7. Certainty required as to payee.

8. What bills are negotiable.

9. Sum payable.

10. Bill payable on demand.

11. Bill payable at a future time.

12. Omission of date in bill payable after date, or acceptance after sight.

13. Presumption as to date of being true date.

14. Computation of time of payment.

15. Case of need.

16. Special stipulations by drawer or endorser restricting liability.

17. Definition and requisites acceptance.

18. Time for acceptance.

19. General and qualified acceptances.

20. Inchoate instruments or blank signatures.

21. Delivery to complete contract.

Capacity and Authority of Parties

22. Capacity of parties.

23. Signature essential to liability.

24. Forged or unauthorised signature.

25. Procuration signatures.

26. Persons signing as agent or in representative capacity.

The Consideration for a Bill

27. Value defined.

28. Accommodation bill or party.

29. Holder in due course.

30. Presumption of value and good faith.

Negotiation of Bills

31. Negotiation defined.

32. Requisites of a valid endorsement.

33. Conditional endorsement.

34. Endorsement in blank.

35. Restrictive endorsement.

36. How long bill continues negotiable.

37. Negotiation of bill to party already liable thereon.

38. Rights of the holder.

General Duties of the Holder

39. When presentment for acceptance is necessary.

40. Time for presenting bill payable after sight.

41. Rules regarding presentment for acceptance, and excuses for non-presentment.

42. Non-acceptance after customary time.

43. Dishonour by non-acceptance and its consequences.

44. Duties as to qualified acceptances.

45. Presentment for payment.

46. Excuses for delay or non-presentment for payment.

47. Dishonour by non-payment.

48. Notice of dishonour and effect of non-notice.

49. Rules as to notice of dishonour.

50. Excuses for giving notice of dishonour.

51. Noting inland bill.

52. Duties of holder as regards drawee or acceptor.

Liabilities of Parties

53. Funds in hands of drawee.

54. Liability of acceptor.

55. Liability of drawer.

56. Stranger signing bill liable as endorser.

57. Measure of damages against parties to dishonoured bill.

58. Transferor by delivery and transferee.

Discharges

59. Payment in due course.

60. Banker paying demand draft whereon endorsement is forged.

61. Acceptor the holder at maturity.

62. Express waiver or renunciation.

63. Cancellation.

64. Alteration of bill.

Acceptance and Payment for Honour

65. Acceptance for honour supra protest.

66. Liability of acceptor for honour.

67. Presentment to acceptor for honour.

68. Payment for honour supra protest.

Lost Instruments

69. Holder's right to duplicate of lost bill.

70. Action on lost bill.

Bill in a Set

71. Rules as to sets.

Conflict of Laws

72. Rules where laws conflict.

PART III

Cheques on a Banker

73. Cheque defined.

74. Presentment of cheque for payment.

75. Revocation of bankers authority.

Crossed Cheques

76. General and special crossings defined.

77. Crossing by drawer or after issue.

78. Crossing a material part of cheque.

79. Duties of banker as to crossed cheque.

80. Protection to banker and drawer where cheque is crossed.

81. Effect of crossing or "not negotiable” on holder.

82. Protection to collecting banker.

83. Extension of sections 76 to 82 to certain drafts on bankers.

84. Application of sections 76 to 82 to drafts drawn by a bank on itself.

PART IV

Promissory Notes

85. Promissory note defined.

86. Delivery necessary.

87. Joint and several notes.

88. Note payable on demand.

89. Presentment of note for payment to render maker liable.

90. Liability of maker.

91. Application of part II to notes.

PART V

Supplementary

92. Good faith.

93. Signature.

94. Computation of time.

95. When noting equivalent to protest.

96. Protest when notary not accessible.

97. Dividend warrants may be crossed.

98. Savings.

SCHEDULE

25 of 1927,

30 of 1930,

5 of 1955,

25 of 1957,

30 of 1961.

AN ORDINANCE to declare the law relating to Bills of Exchange, Cheques, Bankers Drafts, and Promissory Notes.

[Date of Commencement: 1st March, 1928]

PART I

Preliminary

1. Short title.

This Ordinance may be cited as the Bills of Exchange Ordinance.

2. Interpretation.

In this Ordinance, unless the context otherwise requires—

"acceptance” means an acceptance completed by delivery or notification;

"action” includes a claim in reconvention and set-off;

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

"bank holiday” means a day appointed to be a bank holiday by or under the powers contained in any enactment for the time being in force;

"bankrupt” includes any person whose estate is vested in a trustee or assignee under the law for the time being in force relating to insolvency or bankruptcy;

"bearer” means the person in possession of a bill or note which is payable to bearer;

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

"delivery” means transfer of possession, actual or constructive, from one person to another;

"holder” means the payee or endorsee of a bill or note who is in possession of it, or the bearer thereof;

"endorsement” means an endorsement completed by delivery;

"issue” means the first delivery of a bill or note, complete in form, to a person 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. Bill of exchange defined.

(1) 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 deter-minable future time, a sum certain in money to or to the order of a specified person, or to bearer.

(2) An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange.

Particular fund.

(3) An order to pay out of a particular fund is not unconditional within the meaning of this section; but an unqualified order to pay, coupled with:

(a) an indication of a particular fund out of which the drawee is to reimburse himself or a particular account to be debited with the amount, or

(b) a statement of the transaction which gives rise to the bill, is unconditional.

Date, place and value.

(4) A bill is not invalid by reason—

(a) that it is not dated;

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

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

4. Inland and foreign bills.

(1) An inland bill is a bill which is, or on the face of it purports to be—

(a) both drawn and payable within Sri Lanka, or

(b) drawn within Sri Lanka upon some person resident therein.

Any other bill is a foreign bill.

(2) Unless the contrary appear on the face of the bill the holder may treat it as an inland bill.

5. Effect where different parties to bill are the same person.

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

Drawer and drawee same person or firm.

(2) Where in a bill drawer and drawee are the same person, or where the drawee is a fictitious person or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or as a promissory note.

6. Address to drawee.

(1) The drawee must be named or otherwise indicated in a bill with reasonable certainty.

(2) A bill may be addressed to two or more drawees whether they are partners or not, but an order addressed to two drawees in the alternative, or to two or more drawees in succession, is not a bill of exchange.

7. Certainty required as to payee.

(1) Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty.

(2) A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one or some of several payees. A bill may also be made payable to the holder of an office for the time being.

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

8. What bills are negotiable.

(1) When a bill contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but is not negotiable.

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

(3) A bill is payable to bearer which is expressed to be so payable, or on which the only or last endorsement is an endorsement in blank.

(4) A bill is payable to order which is expressed to be so payable, or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable.

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

9. Sum payable.

(1) The sum payable by a bill is a sum certain within the meaning of this Ordinance, although it is required to be paid—

(a) with interest;

(b) by stated installments;

(c) by stated installments, with a provision that upon default in payment of any installment the whole shall become due;

(d) according to an indicated rate of exchange, or according to a rate of exchange to be ascertained as directed by the bill.

(2) Where the sum payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable.

(3) Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, interest runs from the date of the bill, and if the bill is undated, from the issue thereof.

(4) Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, the interest shall be at the rate of nine per centum per annum:

Provided that the amount recoverable on account of interest or arrears of interest shall in no case exceed the principal.

10. Bill payable on demand.

(1) A bill is payable on demand—

(a) which is expressed to be payable on demand, or at sight, or on presentation; or

(b) in which no time for payment is expressed.

(2) Where a bill is accepted or endorsed when it is overdue, it shall, as regards the acceptor who so accepts, or any endorser who so endorses it, be deemed a bill payable on demand.

11. Bill payable at a future time.

(1) A bill is payable at a determinable future time within the meaning of this Ordinance which is expressed to be payable-

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

(b) on or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening may be uncertain.

(2) An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect.

12. Omission of date in bill payable after date, or acceptance after sight.

Where a bill expressed to be payable at a fixed period after date is issued undated, or where the acceptance of a bill payable at a fixed period after sight is undated, any holder may insert therein the true date of issue or acceptance, and the bill shall be payable accordingly:

Provided that—

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

(ii) in every case where a wrong date is inserted, if the bill subsequently comes into the hands of a holder in due course the bill shall not be avoided thereby, but shall operate and be payable as if the date so inserted had been the true date.

13. Presumption as to date of being true date.

(1) Where a bill or an acceptance or any endorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance, or endorsement, as the case may be.

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

14. Computation of time of payment.

Where a bill is not payable on demand, the day on which it falls due is determined as follows—

(1) Three days, called days of grace, are, in every case where the bill itself does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace:

Provided that—

1(a) when the last day of grace falls on Sunday, Christmas Day, Good Friday, or a day appointed to be a public holiday by or under any law for the time being in force, the bill is, except in the case hereinafter provided for, due and payable on the preceding business day;

1(b) when the last day of grace is a bank holiday (other than Christmas Day or Good Friday), or when the last day of grace is a Sunday and the second day of grace is a bank holiday, the bill is due and payable on the succeeding business day.

(2) Where a bill is payable at a fixed period after date, after sight, or after the happening of a specified event, the time of payment is determined by excluding the day from which the time is to begin to run and by including the day of payment.

(3) Where a bill is payable at a fixed period after sight, the time begins to run from the date of the acceptance if the

bill be accepted, and from the date of noting or protest if the bill be noted or protested for non-acceptance, or for non-delivery.

(4) The term month or in a bill means calendar month.

[S 14(4) am by s 2 of Act 30 of 1961.]

15. Case of need.

The drawer of a bill and any endorser may insert therein the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonoured by non-acceptance or non-payment. Such person is called the referee in case of need. It is in the option of the holder to resort to the referee in case of need or not, as he may think fit.

16. Special stipulations by drawer or endorser restricting liability.

The drawer of a bill, and any endorser, may insert therein an express stipulation—

(a) negativing or limiting his own liability to the holder;

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

17. Definition and requisites acceptance.

(1) The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer.

(2) An acceptance is invalid unless it complies with the following conditions, namely—

(a) It must be written on the bill and be signed by the drawee. The mere signature of the drawee without additional words is sufficient.

(b) It must not express that the drawee will perform his promise by any other means than the payment of money.

18. Time for acceptance.

A bill may be accepted—

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

(b) when it is overdue, or after it has been dishonoured by a previous refusal to accept, or by non-payment;

(c) when a bill payable after sight is dishonoured by non-acceptance, and the drawee subsequently accepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of first presentment to the drawee for acceptance.

19. General and qualified acceptances.

(1) An acceptance is either—

(a) general, or

(b) qualified.

(2) A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn.

(3) In particular an acceptance is qualified which is—

(a) conditional, that is to say, which makes payment by the acceptor dependent on the fulfillment of a condition therein stated;

(b) partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn;

(c) local, that is to say, an acceptance to pay only at a particular specified place;

(d) qualified as to time;

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

(4) An acceptance to pay at a particular place is a general acceptance, unless it expressly states that the bill is to be paid there only, and not elsewhere.

20. Inchoate instruments or blank signatures.

(1) Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor; or an endorser; and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit.

(2) In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Reasonable time for this purpose is a question of fact:

Provided that if any such instrument after completion is negotiated to a holder in due course, it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given.

21. Delivery to complete contract.

(1) Every contract on a bill, whether it be the drawer's, the acceptor's, or an endorsee's, is incomplete and revocable until delivery of the instrument in order to give effect thereto:

Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable.

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