A cheque “is a bill of exchange drawn on a banker payable on demand” (§ 73). For the most part the rules of law applicable to bills payable on demand apply in their entirety to cheques. But there are certain peculiar rules Cheques. relating to the latter which arise from the fact that the relationship of banker and customer subsists between the drawer and drawee of a cheque. For example, when a person has an account at a bank he is, as an inference of law, entitled to draw on it by means of cheques. A right to overdraw, can, of course, only arise from agreement. The drawer of a cheque is not absolutely discharged by the holder’s omission to present it for payment within a reasonable time. He is only discharged to the extent of any actual damage he may have suffered through the delay (§ 74). Apart from any question of delay, a banker’s authority to pay his customer’s cheques is determined by countermand of payment or by notice of the customer’s death (§ 75). Of recent years the use of cheques has enormously increased, and they have now become the normal machinery by which all but the smallest debts are discharged. To guard against fraud, and to facilitate the safe transmission of cheques by post, a system of crossing has been devised which makes crossed cheques payable only through certain channels. The first act which gave legislative recognition to the practice of crossing was the 19 and 20 Vict. c. 95. That act was amended in 1858, and a consolidating and amending act was passed in 1876. The act of 1876 is now repealed, and its provisions are re-enacted with slight modifications by §§ 76 to 82 of the Bills of Exchange Act 1883. A cheque may be crossed either “generally” or “specially.” A cheque is crossed generally by drawing across it two parallel lines and writing between them the words “& Co.” When a cheque is crossed generally it cannot be paid over the counter. It must be presented for payment by a banker. A cheque is crossed specially by adding the name of the banker, and then it can only be presented through that particular banker. A cheque, whether crossed generally or specially, may further be crossed with the words “not negotiable.” A cheque crossed “not negotiable” is still transferable, but its negotiable quality is restricted. It is put on pretty much the same footing as an overdue bill. The person who takes it does not get, and cannot give a better title to it, than that which the person from whom he took it had. These provisions are supplemented by provisions for the protection of paying and collecting bankers who act in good faith and without negligence. Suppose that a cheque payable to bearer, which is crossed generally and with the words “not negotiable,” is stolen. The thief then gets a tradesman to cash it for him, and the tradesman gets the cheque paid on presentment through his banker. The banker who pays and the banker who receives the money for the tradesman are protected, but the tradesman would be liable to refund the money to the true owner. Again, assuming payment of the cheque to have been stopped, the tradesman could not maintain an action against the drawer.
A promissory note is defined by section 83 of the act to be an “unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand, or at a fixed or determinable future time, Promissory notes. a sum certain in money to or to the order of a specified person or to bearer.” A promissory note may be made by two or more makers, and they may be liable either jointly, or jointly and severally, according to its tenor (§ 85). For the most part, rules of law applicable to a bill of exchange apply also to a promissory note, but they require adaptation. A note differs from a bill in this: it is a direct promise to pay, and not an order to pay. When it issues it bears on it the engagement of the principal debtor who is primarily liable thereon. The formula for applying to notes the rules as to bills is that “the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note shall be deemed to correspond with the drawer of a bill payable to drawer’s order” (§ 89). Rules relating to presentment for acceptance, acceptance, acceptance supra protest, and bills in a set, have no application to a note. Moreover, when a foreign note is dishonoured it is not necessary, for English purposes, to protest it. All promissory notes are, under the Stamp Act 1891, subject to an ad valorem stamp duty. Inland notes must be on impressed stamp paper. Foreign notes are stamped with adhesive stamps. For ordinary legal purposes a bank note may be regarded as a promissory note made by a banker payable to bearer on demand. It is, however, subject to special stamp regulations. It is not discharged by payment, but may be re-issued again and again. In the interests of the currency the issue of bank notes is subject to various statutory restrictions. A bank, other than the Bank of England, may not issue notes in England unless it had a lawful note issue in 1844. On the other hand, Bank of England notes are legal tender except by the bank itself.
In fundamental principles there is general agreement between the laws of all commercial nations regarding negotiable instruments. As Mr Justice Story, the great American lawyer, says: “The law respecting negotiable instruments Foreign laws. may be truly declared, in the language of Cicero, to be in a great measure not the law of a single country only, but of the whole commercial world. Non erit lex alia Romae, alia Athenis, alia nunc alia posthac, sed et apud omnes gentes et omni tempore, una eademque lex obtinebit” (Swift v. Tyson, 16 Peters i). But in matters of detail each nation has impressed its individuality on its own system. The English law has been summarized above. Perhaps its special characteristics may be best brought out by comparing it with the French code and noting some salient divergences. English law has been developed gradually by judicial decision founded on trade custom. French law was codified in the 17th century by the “Ordonnance de 1673.” The existing “Code de Commerce” amplifies but substantially adopts the provisions of the “Ordonnance.” The growth of French law was thus arrested at an early period of its development. The result is instructive. A reference to Marius’ treatise on bills of exchange, published about 1670, or Beawes’ Lex Mercatoria, published about 1740, shows that the law, or rather the practice, as to bills of exchange was even then fairly well defined. Comparing the practice of that time with the law as it now stands, it will be seen that it has been modified in some important respects. For the most part, where English law differs from French law, the latter is in strict accordance with the rules laid down by Beawes. The fact is that, when Beawes wrote, the law or practice of both nations on this subject was nearly uniform. But English law has gone on growing while French law has stood still. A bill of exchange in its origin was an instrument by which a trade debt due in one place was transferred to another place. This theory French law rigidly keeps in view. In England bills have developed into a paper currency of perfect flexibility. In France a bill represents a trade transaction; in England it is merely an instrument of credit. English law affords full play to the system of accommodation paper; French law endeavours to stamp it out. A comparison of some of the main points of difference between English and French law will show how the two theories work. In England it is no longer necessary to express on a bill that value has been given for it, for the law raises a presumption to that effect. In France the nature of the consideration must be stated, and a false statement of value avoids the bill in the hands of all parties with notice. In England a bill may be drawn and payable in the same place. In France the place where a bill is drawn should be so far distant from the place where it is payable that there may be a possible rate of exchange between the two. This so-called rule of distantia loci is said to be disregarded now in practice, but the code is unaltered. As French lawyers put it, a bill of exchange necessarily presupposes a contract of exchange. In England since 1765 a bill may be drawn payable to bearer, though formerly it was otherwise. In France it must be payable to order; if it were not so it is clear that the rule requiring the consideration to be truly stated would be a nullity. In England a bill originally payable to order becomes payable to bearer when indorsed in blank. In France an indorsement in blank merely operates as a procuration. An indorsement, to operate as a negotiation, must be to order, and must state the consideration; in short, it must conform to the conditions of an original draft. In England, if a bill is dishonoured by non-acceptance, a right of action at once accrues to the holder. In France no cause of action arises unless the bill is again dishonoured at maturity; the holder in the meantime is only entitled to demand security from the drawer and indorsers. In England a sharp distinction is drawn between current and overdue bills. In France no such distinction is drawn. In England no protest is required in the case of the dishonour of an inland bill, notice of dishonour being sufficient. In France every dishonoured bill must be protested. Opinions may differ whether the English or the French system is better calculated to serve sound commerce and promote a healthy commercial morality. But an argument in favour of the English system may be derived from the fact that as the various continental codes are from time to time revised and re-enacted, they tend to depart from the French model and to approximate to the English rule. The effect upon English law of its codification has yet to be proved. A common objection to codification in England is that it deprives the law of its elastic character. But when principles are once settled common law has very little elasticity. On the other hand no code is final. Modern parliaments legislate very freely, and it is a much simpler task to alter statute law than to alter common law. Moreover, legislation is cheaper than litigation. One consequence of the codification of the English law relating to bills is clear gain. Nearly all the British colonies have adopted the act, and where countries are so closely connected as England and her colonies, it is an obvious advantage that their mercantile transactions should be governed by one and the same law expressed in the same words.
The ordinary text-books on the law of bills of exchange are constantly re-edited and brought up to date. The following among others may be consulted:—Byles, Bills of Exchange; Chalmers, Bills of Exchange; Daniel, Law of Negotiable Instruments (United States); Nouguier, Des lettres de change et des effets de commerce (France); Thorburn, Bills of Exchange Act 1882 (Scotland); Story, Bills of Exchange (United States); Hodgins, Bills of Exchange Act 1890 (Canada).
(M. D. Ch.)
[1] This is also the definition given in the United States, by § 126 of the general act relating to negotiable instruments, prepared by the conference of state commissioners on uniform legislation, and it has been adopted in the leading states.
BILL OF RIGHTS, an important statute in English constitutional history. On the 13th of February 1689 the Declaration of Right, a document drawn up by a committee of the commons, and embodying the fundamental principles of the constitution, was delivered by the lords and commons to the prince and princess of Orange, afterwards William III. and Mary. In December 1689 the rights claimed by the declaration were enacted with some alterations by the Bill of Rights, next to Magna Carta the greatest landmark in the constitutional history of England and the nearest approach to the written constitutions of other countries. The act (the full name of which is An Act declaring the Rights and Liberties of the Subject, and settling the Succession of the Crown), after reciting the unconstitutional proceedings of James II., the abdication of that king, the consequent vacancy of the crown, and the summons of the convention parliament, declared, on the part of the lords and commons, “for the vindicating and asserting their ancient rights and liberties”—
“(1) That the pretended power of suspending of laws or the execution of laws by regal authority without consent of parliament is illegal. (2) That the pretended power of dispensing with laws or the execution of laws by regal authority, as it hath been assumed and exercised of late, is illegal. (3) That the commission for erecting the late court of commissioners for ecclesiastical causes, and all other commissions and courts of like nature, are illegal and pernicious. (4) That levying money for or to the use of the crown, by pretence of prerogative, without grant of parliament, for longer time or in other manner than the same is or shall be granted, is illegal. (5) That it is the right of the subjects to petition the king, and all commitments and prosecutions for such petitioning are illegal. (6) That the raising or keeping a standing army within the kingdom in time of peace, unless it be with consent of parliament, is against law. (7) That the subjects which are Protestants may have arms for their defence suitable to their conditions, and as allowed by law. (8) That elections of members of parliament ought to be free. (9) That the freedom of speech, and debates or proceedings in parliament, ought not to be impeached or questioned in any court or place out of parliament. (10) That excessive bail ought not to be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted. (11) That jurors ought to be duly impanelled and returned and jurors which pass upon men in trials for high treason ought to be freeholders. (12) That all grants and promises of fines and forfeitures of particular persons before conviction are illegal and void. (13) And that for redress of all grievances, and for the amending, strengthening and preserving of the laws, parliament ought to be held frequently. And they do claim, demand and insist upon all and singular the premises, as their undoubted rights and liberties.”