Home >> Dictionary Of Banking >> Guardians Of The Poor to Or Mandate >> Negotiation of Bill of

Negotiation of Bill of Exchange

negotiated, section, person, indorser, payable and indorsement

NEGOTIATION OF BILL OF EXCHANGE. The Bills of Exchange Act, 1882, Section 8, s.s. 2, provides that " A negotiable bill may be payable either to order or to bearer." The negotiation of a bill is defined in Section 31 : " (1) A bill is negotiated when it is trans ferred from one person to another in such a manner as to constitute the transferee the holder of the bill.

" (2) A bill payable to bearer is negotiated by delivery.

" (3) A bill payable to order is negotiated by the indorsement of the holder completed by delivery.

" (4) Where the holder of a bill payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the bill, and the transferee in addition acquires the right to have the indorsement of the transferor.

" (5) Where any person is under obligation to indorse a bill in a representative capacity, he may indorse the bill in such terms as to negative personal liability." By Section 36 : " (1) Where a bill is negotiable in its origin it continues to be negotiable until it has been (a) restrictively indorsed or (b) discharged by pay ment or otherwise.

" (2) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had.

" (3) A bill payable on demand is deemed to be overdue within the meaning, and for the purposes, of this Section, when it appears on the face of it to have been in circulation for an unreasonable length of time. What is an unreasonable length of time for this purpose is a question of fact.

" (4) Except where an indorsement bears date after the maturity of the bill, every negotiation is primci facie deemed to have been effected before the bill was overdue.

" (5) Where a bill which is not overdue has been dishonoured any person who takes it with notice of the dishonour takes it subject to any defect of title attaching thereto at the time of dishonour, but no thing in this sub-section shall affect the rights of a holder in due course." A bill may, in the ordinary course of busi ness, be negotiated back to a party already liable thereon. By Section 37 : "Where a bill is negotiated back to the drawer, or to a prior indorser or to the acceptor, such party may, subject to the provisions of this Act, re-issue and further I negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable." Where a bill has been transferred by in dorsement to, say, four different persons and the fourth indorser indorses it back to the first, indorser number one cannot enforce payment against the second, third or fourth indorsers, because each of those three indorsers has a claim against him as the first indorser. But if the first indorser negatived his liability when indorsing the bill, by the addition of the words " without recourse " to his signature, he can enforce payment, when the bill is indorsed back to him, against the said second, third or fourth indorsers because they have, in that case, no claim against him.

By Section 8, s.s. 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." (See BILL OF EXCHANGE, DELIVERY OF BILL, INDORSEMENT.)