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Commercial Law II-Introduction and Hire Purchase

Lecture Notes-Introductory
by

Clement Akapame

on 16 February 2015

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Transcript of Commercial Law II-Introduction and Hire Purchase

Commercial Law II
Recap of Commercial Law I
LECTURES
We did GREAT compared to other sister institutions
I Enjoyed the interactions and sometimes the "offside" challenges and comments
The Exams showed varying degrees of appreciation of what we studied in class
EXAMINATION
I did my best to ensure that we all crossed the line but.....
SOME OF THE ISSUES
Answering a question without a SINGLE authority (Case Law and Statue)
Failure to answer the compulsory question
Answering ALL three questions incompletely
WAY FORWARD
If you have an issue with your provisional grade see the Dean
Grade discrepancies on-board and online
There is always room for re-marking
Prepare for the rewrite which will not be any different from the questions answered in the main examinations
Commercial Law II
Mop-up and completion of Sale of Goods
Hire-Purchase and International Sale
Negotiable Instrument and Bills of Exchange
Financing International Trade
Principles of Banking Law
Introduction to Non-Financial Institutions
Commercial Contracts and Litigation

D may in turn sign the bill and deliver it to E, and it may be passed from E to another and so on.
When the bill matures, the current holder will be entitled to receive payment, either from B, the acceptor, or from one of the other parties.
If the bill is a bearer bill, (that is it is not payable to any specified person), there is even less difficulty about negotiation, because the right to payment passes with the physical possession of the bill; it vests in the person who is the current holder without any need for indorsement.
This means that even a thief will be able to obtain payment from the acceptor on such a bill.
The order is written and signed by (A) (the drawer), and is usually addressed to his or her bank (B) (the drawee). B is instructed to pay C (the payee) money. B (the bank) may pay out of A’s account, and when it does so, it discharges its debt to A to the extent of the payment made to C.
These are the bare bones of the transaction.
The issues are expanded below.
The definition sets out the requirements in a nutshell.
It may be helpful to start by describing the parties in a straightforward type of transaction:
A bill is an order by one person to another, requiring that person to pay money to a third person, or to bearer.
Negotiable instruments are substitutes for money
They are treated as documents of title to money.
Like money (and unlike ordinary contracts), consideration, good faith, etc., are all presumed
Examples of negotiable instruments include:
Cheques
Promissory notes
Certificates of deposits
Bankers drafts (or cashiers cheques),
Money orders
Bills of exchange, etc
These documents are negotiable instruments because they are easily transferable and make commercial transactions easier.
They are assignable (even as debt instruments) by simple delivery or endorsement & delivery, free from the equities. (With no requirement to give anyone any notice! – Thus differs from an ordinary contract.)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
DETERMINATION OF A CHEQUE
A banker’s authority to pay a cheque is determined by:
Countermand; that is stopping the cheque.
Notice of the death of the customer;
What of mental incapacity?
What of bankruptcy?
Where by contract banker is not required to overdraw the account?
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Special crossing
A special crossing is one which bears across its face an addition of the name of a banker, 75(2)
A special crossing is one which bears across its face an addition of the name of a banker, with the words “not negotiable” 75(2).
In such cases the cheque is crossed specially and to that specific banker. Sections 75(2) & 78(1).
According to Section 78(1), a specially crossed cheque is specific to the banker named and no other unless it is crossed to an agent for collection and that agent happens to be a banker.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
CROSSED CHEQUES
A cheque may be open or crossed.
A crossed cheque is one which has two parallel traverse lines drawn across its face with or without words written on it in addition to the crossing.
When a cheque is crossed it can only be paid to a banker.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
CAN OTHER DOCUMENTS SUBSTITUTE A CHEQUE?
Section 82(a)
“Any document issued by a customer of a banker which, though not a cheque, is intended to enable a person to obtain payment from that banker of the sum mentioned in the document;” is considered a cheque; and the provisions of Sections 75 to 81 of Act 55 relating to cheques shall apply to such documents and have effect in relation to them, as they have effect in relation to cheques.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
IS A BANKER’S DRAFT A CHEQUE?
Section 82(b)
“Any draft payable on demand drawn by a banker upon himself, whether payable at the head office or some other office of his bank;” is considered a cheque; and the provisions of Sections 75 to 81 of Act 55 relating to cheques shall apply to such drafts and have effect in relation to such drafts, as they have effect in relation to cheques.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A cheque must have the following characteristics:
It must be an order
The order must be unconditional
It must be in writing
Addressed by one person to a banker
Signed by the person giving it
Drawn on a banker
Payable on demand
Require the banker to pay
On demand
A sum certain in money
To the order of a specified person or
To bearer
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
For cases discussing the characteristics of a promissory note, see:
Sabblah v. Tawiah [1966] GLR 145
Directors of Orthodox Secondary School of Peki v. Tawlma-Abels [1974] 1 GLR 419
Section 84 provides that a promissory note is inchoate and incomplete until it is delivered to the payee or bearer.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
HDC MUST BE A HOLDER FOR VALUE
A holder in due course must necessarily be a holder for value. Value must have been given. S. 25(1) (a). Past consideration is good consideration. S. 25(1) (b). Also, if the present holder of the instrument has not himself given value but some previous holder had done so, the holder is a holder for value and he is given some measure of protection. S. 25(2). But this is not the case when we are dealing with HDC.
Every party whose signature appears on the bill is prima facie deemed to have given value s. 28(1). But this presumption will be inapplicable to HDC.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
There must however be something to put the holder on inquiry!
Guildford Trust v. Goss
Facts: Money lenders took post-dated cheques in repayment of loans. They were drawn by one partner, indorsed by another, and dealt with by a third partner.
Held: The facts did not put the transferees on inquiry.
There is no question of constructive notice! Notice in section 27 refers to actual notice. The equitable doctrine of constructive notice by which a man, who refrains through gross negligence from making enquiries, is held to have had notice, is inapplicable to negotiable instruments. Joint Stock Bank v. Simmons (per Lord Herschell)
 Note section 27(3)!! – It implies that even if one had notice, so long as he is not complicit in the fraud or illegality, and obtained the title through a holder in due course,… he has a valid title.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(7) NOTICE
Notice may be particular (express) or general.
Particular notice is where the holder had notice of the particular facts avoiding the bill.
Midland Bank v. Reckitt [1933] A.C. 1, 19
General notice is where the holder had notice that there was some illegality or some fraud vitiating the bill, though he may not have been apprised of its precise nature.
A wilful or fraudulent absence of inquiry into the circumstances, when they are known to be such as to invite inquiry, will (if the abstinence from inquiry arose out of a belief or suspicion that an inquiry would disclose a vice in the bill) amount to a general or implied notice. Jones v. Gordon
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(6) GOOD FAITH
The holder of the instrument must have acted in good faith i.e. honestly, without knowledge of any defect in title of a previous holder. Section 90 of Act 55 says that a thing is deemed to be done in good faith where it is in fact done honestly, whether it is done negligently or not.
Mere negligence, however gross, not amounting to wilful or fraudulent blindness and abstinence from inquiry, will not of itself amount to lack of good faith, but it may be evidence of notice.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(5) DISHONOUR
Section 34(5) deals with dishonoured bills. A holder in due course must not have any notice of any such dishonour of the bill in question. According to Section 34(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 such a defect will not affect a holder in due course who takes the bill without notice of the dishonour. See section 27.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(4) OVERDUE
Section 34 deals with overdue bills.
Section 86 deals with overdue notes.
Sections 34(3) and 86 deal with bills and notes that are payable on demand. [Section 8 defines bills payable on demand].
Section 12 deals with the computation of time for payment of bills that are not payable on demand BUT payable at a future time. (Under section 12 such bills or notes are not overdue till after the expiration of the three (3) days of grace). [Section 9 defines bills payable at a future time NOT on demand].
Section 34(3) says that a bill payable on demand is overdue if it appears on the face of it to have been in circulation for an unreasonable length of time.
Reasonable length of time is a question of fact.
Section 86(2) gives guidelines on how to determine a reasonable length of time.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(3) COMPLETE AND REGULAR
The instrument must be complete and regular – that is, the instrument must appear to be in order on the face of it: both front and back. The expression therefore includes the endorsements. Arab Bank, Ltd v. Ross [1952] 1 All E.R. 709, 715 per Lord Denning.
Facts: The Pt bank sued as holders in due course of two promissory notes made by the Dt in favour of “Fathi and Faysal Nabulsy Company,” which were endorsed “Fathi and Faysal Nabulsy”.
Held: The endorsement was sufficient to pass a title but the bank were not holders in due course as the endorsement was irregular.
So if there is anything on the instrument, or any omission, which should put a transferee on inquiry, it will be difficult to claim HDC status.
Even an alteration of the date is material and prevents a cheque from being regular on the face of it.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(2) BILL
The instrument must be a bill.
It must have been ISSUED. An instrument is not a bill if it has not been issued! See Sections 97 and 19(1). Ingham v. Primrose (1859) 7 C.B. (NS) 82
The instrument is not a bill if the purported signature of the drawer is a forgery. Section 22
The instrument is not a bill if the drawer has no capacity to contract. Section 20 (1). Although such an instrument might not be enforceable against the drawer or endorser of incapacity, it may however entitle the holder to enforce it against any other party thereto. Section 20 (2).
The instrument is not a bill if the drawer of the bill or maker of the note signs it in the reasonable belief that he is witnessing someone else’s signature to another document. NOTE: The drawer is in such cases entitled to a plea of non est factum. Lewis v. Clay (1897) 14 T.L.R. 149.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
(1) HOLDER
Though the payee can be a holder for value, arguably, the payee cannot be a holder in due course! Because bill is issued to him; NOT NEGOTIATED TO HIM! For one to be a holder in due course, the bill must have been negotiated to him! – Section 27(1)(b).
R.E. Jones Ltd. v.Waring & Gillow [1926] A.C. 670
Lewis v. Clay (1897) 14 T.L.R. 149
BUT see the case of Herman v. Wheeler [1902] 1. K.B. 361; Lloyds Bank Ltd. v. Cooke [1907] 1 K.B. 794 (CA)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A holder in due course holds the bill free from any defects in title of prior parties.
Section 27(2) lists some examples of acts that my cause a defect in title:
When the person negotiating the bill obtained it or acceptance thereof by
Fraud
Duress
Force and fear
Other Unlawful means
Or for an illegal consideration
Or when he negotiates it in breach of faith
Or such circumstance that amounts to fraud
Its conclusively presumed that every party to the bill prior to him made a valid delivery of it. Section 19(2)(b)( … in the hands of a HDC, a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed.)
The person to whom a current and apparently regular negotiable instrument has been negotiated, who takes it in good faith and for value, obtains a good title to it even though his transferor had a defective title or no title to it. Section 36(b)&(c).
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
HOLDER IN DUE COURSE
Section 27(1) of Act 55 defines a holder in due course as follows:-
A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions, namely that:
(a)he became the holder of it before it was overdue, & without notice that it had been previously dishonoured, if such was the fact; or
(b)he took the bill in good faith and for value, & that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
HOLDER FOR VALUE
S. 97 says a holder means a payee or endorsee or a bearer of a bill.
S. 97 says value means valuable consideration.
S. 25 says valuable consideration may be constituted by any consideration sufficient to support a simple contract including past consideration Section. 25(1)(a)&(b).
A holder for value would seem on the basis of these sections to be a person who holds or is in possession of a bill for which consideration has been given by the holder or someone else.
Section 25(2) shows that the holder for value does not himself need to give consideration.
Also, every party whose signature appears on the bill is prima facie deemed to have given value. Section 28(1).
Also, a person may have knowledge of a defect in the bill and still be a holder for value but such a person cannot be a holder in due course.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
RESTRICTIVE ENDORSEMENT
According to Section 33(1) of Act 55, an endorsement is restrictive if it:-
Prohibits the further negotiation of the bill; or
Expresses that it is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof.
Examples:
Pay Diana Mintah only
Pay Joana Kwofie for the account of David Solomon
Pay Martha Kwarteng or order for collection.
According to Section 33(2) of Act 55, a restrictive endorsement gives the endorsee the right to:
(i) Receive payment of the bill
(ii) Sue any party thereto that his endorser could have sued.
However, a restrictive endorsement does not give the endorsee any power to transfer his rights, unless the restrictive endorsement expressly authorizes the endorsee to do so. (See Section 33(2) of Act 55). In cases where a restrictive endorsement authorizes further transfer, all subsequent endorsees take the bill with the same rights and subject to the same liabilities of the first endorsee under the restrictive endorsement. Section 33(3) of Act 55.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
SPECIAL ENDORSEMENT
A special endorsement specifies the person to whom, or to whose order, the bill is to be payable.
As noted earlier, a bill endorsed in blank may be converted, by any holder, into a special endorsement by writing above the endorser’s signature a direction to pay the bill to or to the order of himself or some other person.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Where a bill is payable to two or more payees or endorsees who are not partners, all must endorse, unless the one endorsing has authority to endorse for the others.
Where, in a bill payable to order, the payee or endorsee is wrongly designated or his name is mis-spelt, he may endorse the bill as therein described, adding, if he thinks fit, his proper signature.
Where there are two or more endorsements on a bill, each endorsement is deemed to have been made in the order in which it appears on the bill, until the contrary is proved.
An endorsement may be made in blank or special or contain terms making it restrictive.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
NOTE: A BILL MAY NOT BE A NEGOTIABLE INSTRUMENT!
Section 6(1) of Act 55 provides that when a bill contains words prohibiting transfer or indicating an intention that it should not be transferable, it is valid between the parties thereto but it is not negotiable.
Why is this so?
Also, since the essence of a bill of exchange is negotiability, if a bill prohibits transfer -- and transfer is indispensable in negotiability -- See s.29 (1) -- should it still be a bill of exchange?
Yes! See Section 1 of Act 55 (which does not mention negotiability in its definition of a bill) and Section 6(1) (which permits such limiting of negotiability)!
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
To or to the order of a specified person, or
Such bills are referred to as order bills.
The person so named in such bills is the payee
To bearer.
Such bills are referred to as bearer bills.
If an instrument does not comply with these conditions is not a bill of exchange.
So though no precise form of words is essential to the validity of a bill of exchange, any bill must comply substantially with the above requirements.
However, if an instrument is defective as a bill or note, it may still be evidence of an agreement.
NOTE: SECTION 1(4)(a)-(c)
A bill is not invalid merely because it is not dated
A bill is not invalid because no value is given.
A bill is not invalid because it does not specify place where drawn or payable.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A sum certain in money.
A bill or note must be payable in money in specie or legal currency
It must not order any act to be done in addition to the payment of money! -- Section 1(2)
The sum must be certain
It must be susceptible to contingent or indefinite additions or deductions.
According to Section 7(1) a sum is certain even if it is required to be paid:
With interest
By stated instalments
By stated instalments but with provision on full becoming due on default.
According to an indicated rate of exchange
According to a rate of exchange to be ascertained as directed by the bill.
Sums in words trump sums in figures in cases of discrepancies. – Section 7(2)
If figures higher than words evidence to explain difference is inadmissible.
Inaccurate but intelligible statement of sum payable is valid.
[Pound instead of Pounds]
[Twenty-five, seventeen shillings and three is £25 17s. 3d.]
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
At a fixed or determinable future time.
Section 9 of Act 55.
Uncertain –A promissory note payable with interest 12 months after notice.
On or before a given date (invalid) [Williamson v. Rider [1963] 1 Q.B. 89
Twelve months after date (valid)
After sight (if simply so stated, it is invalid!) NOTE the distinction with at sight
After sight is acceptance (so use a period after sight!). BUT At sight is demand.
If it’s a note, then after sight refers to exhibiting the note to the maker. So it can be valid for notes.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
WHY?
Because, a bill of itself does not operate as an assignment of funds in the hands of the drawee available for the payment thereof. – Section 51.
Brown, Shipley & Co. v. Kough (1885) 29 Ch.D. 848
(Facts: Bill drawn by B&Co. on K in London was purchased by A in America. B&Co. informed K by letter of advise on the same day of the bill they had drawn on K in favour of A. K subsequently refused to accept the bill. Held: Refusal valid. The direction on the face of the bill did not operate as an equitable assignment.)
The payee must be named or otherwise indicated with reasonable certainty. – Section 5.
To pay on demand or
Section 8 of Act 55 (“If a bill of exchange is made payable at a never so distant day, if it be a day that must come, it is no objection to the bill.”)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Requiring the person to whom it is addressed.
The person to whom the bill is addressed is the drawee.
To pay.
When drawee undertakes to pay he is called the acceptor.
An acceptance to pay must not express that the drawee will perform his promise by any other means than the payment of money. – Section 15(2)(b)
The drawee is not liable to pay money to the payee or holder of the bill until he accepts the bill. – Section 51.
A verbal undertaken to pay is invalid. – Section 15(2)(a)
Drawee’s mere signature on the bill, without additional words, is sufficient. – Section 15(2)(a)
A drawee who does not accept a bill is not liable on the instrument – Section 51
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
BUT NOTE THE PROVISO! “… 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 reasonable time and strictly in accordance with the authority given! – Section 18(2)
HOWEVER THIS PROVISO APPEARS VERY RESTRICTIVE!
It should have been negotiated to the holder.
The holder must be a holder in due course.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Signed by the person giving it.
The person signing the bill is called the drawer.
This is an essential feature of a bill of exchange.
In its absence, an acceptance is inoperative.
Even if an unsigned instrument is accepted by the drawee, it cannot be treated as a promissory note of the acceptor.
Signature essential to liability of the drawer. – Section 21.
It can be a mark and such signing by mark should be habitual of the person so signing.
If signed by a mark, there is no need to prove that the person so signing cannot write.
If a bill is signed, it is a complete and regular bill, even if it is unaccepted by the drawee.
Signing an inchoate (incomplete) instrument gives the person in possession of it a prima facie authority to fill up the omission in any way he thinks fit! – Section 18(1). Such filling up should be within reasonable time (a question of fact) and strictly in accordance with the authority given. – Section 18(2).
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Addressed by one person to another.
Addressed by the drawer to the drawee.
The drawer and the drawee of a bill can be the same person. – Section 3.
A holder of any such bill (having the same person as both drawee and drawer) may treat it, at his option, as either a bill of exchange or a promissory note. -- Section 3(2)
In any case, the drawee must be named or otherwise indicated in a bill with reasonable certainty. – Section 4
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
An instrument expressed to be payable on a contingency is not a bill, and the happening of the contingency event does not cure the defect. – Section 9(2).
Carlos v. Fancourt (1794) 5 T.R. 482, @485 per Lord Kenyon:
“It would perplex the commercial transactions of mankind, if paper securities of this kind were issued out into the world, encumbered with conditions and contingencies, and if the persons to whom they were offered in negotiation were obliged to inquire when these uncertain events would probably be reduced to certainty.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
An unconditional order.
Ordering the payment of money out of a particular fund is conditional. – S. 1(3)
An unqualified order to pay, coupled with an indication of a particular fund out of which the drawee is to reimburse himself is not conditional – Section 1(3)
An unqualified order to pay, coupled with an indication of a particular account to be debited with the amount is not conditional. – Section 1(3)
Guaranty Trust Co. of New York v. Hannay & Co. [1918] 2 K.B. 623, 635
An unqualified order to pay, coupled with a statement of the transaction which gives rise to the bill is not conditional. – Section 1(3)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
BANKER’S DRAFT
IS A BANKER’S DRAFT A CHEQUE?
Any draft payable on demand drawn by a banker upon himself, whether payable at the head office or some other office of his bank is considered a cheque;
And the provisions of Sections 75 to 81 of Act 55 relating to cheques apply to such drafts and have effect in relation to such drafts, as they have effect in relation to cheques.
OTHER CHEQUE SUBSTITUTES
CAN OTHER DOCUMENTS SUBSTITUTE A CHEQUE?
Any document issued by a customer of a banker which, though not a cheque, is intended to enable a person to obtain payment from that banker of the sum mentioned in the document; is considered a cheque;
And the provisions of Sections 75 to 81 of Act 55 relating to cheques shall apply to such documents and have effect in relation to them, as they have effect in relation to cheques.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
ENDORSEMENT
Endorsement takes place when the name and/or the signature of the transferor is written on the instrument and it is completed by delivery to the transferee.
ENDORSER
Endorser is the transferor whose name and/or the signature is written on the instrument.
ENDORSEE
Endorsee is the person to whom an instrument is transferred by endorsement.
BEARER
A bearer is the person in possession of an instrument payable to bearer or on which the last endorsement is an endorsement in blank.
HOLDER
The holder is the payee or endorsee of an instrument who is in possession of it, or the bearer thereof
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
ISSUE
The first delivery of an instrument, complete in form, to a person who takes it as a holder is known as the issue of the instrument.
NEGOTIATION
An instrument is negotiated when it is transferred for value to a person who then becomes entitled to hold it and can sue on it in his own name.
A bill payable to bearer is negotiated by delivery. Sec. 29(2)
A bill payable to order is negotiated by the holder’s endorsement completed by delivery. Sec. 29(3)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
ACCEPTANCE
Acceptance consists of the signification of the assent of the drawee completed by delivery or notification of the assent to the holder of the negotiable instrument.
PAYEE
The payee is the party to whom the negotiable instrument is payable.
MAKER
The maker is the party who makes an instrument in the form of a promissory note.
DELIVERY
Delivery is the transfer of possession of an instrument from one person to another whether actual or constructive. [See Section 97 of Act 55]
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
NEGOTIABLE INSTRUMENT UNDER GHANA LAW
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
The relationships between these parties, the problems which might arise and the appropriate defences are examined as below
Capacity:
generally, any person with capacity to contract may sign a bill; liability is co-extensive with the right to contract
Any person with contractual capacity who signs the bill will be bound as an indorser to a holder in due course, even if he or she receives no value for it.
A person whose signature has been forged does not incur liability; indeed, the forgery of the drawer’s or indorser’s signature invalidates the instrument as a bill so that a holder cannot obtain a good title to it, although he or she is given certain personal rights (by estoppel) against other parties.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
These are the parties in this transaction:
A is the drawer
B is the drawee, later the acceptor;
C is the payee; when C indorses the bill to D, C becomes the first indorser (D is the first indorsee)
D is the second indorsee (E the third, F the fourth);
Whichever of C,D,E,F and G possesses the bill is the holder of it at that time.
D, E and F may be holders in due course, but C, the payee cannot be because bills are not negotiated to the payee.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
D then negotiates the bill to E, who may in turn negotiate it to F; who may negotiate it further;
When the bill reaches maturity, the holder, say G, should present it immediately to the acceptor for payment (if G does not, the liability of the other parties is discharged);
If B pays, the bill is discharged and B should cancle A’s signature on it.
If B does not pay, the bill is dishonoured by non-payment and G should serve notice of dishonour as soon as possible on A, C, D, E, and F and seek payment from the other parties;
If any of them pays the bill is discharged, because that party has a right to sue the other parties on the bill;
The bill is only discharged when there are no more parties liable on it.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A draws the bill on B, to pay C, and delivers it to C; the bill is payable “60 days after sight”;
C wishing to receive payment immediately, negotiates the bill to D for an immediate (reduced) payment;
C writes on the back of the bill “Pay D” and signs it;
D presents the bill to B for acceptance;
If B accepts it, B may write: “Accepted, payable at X branch,” date, and sign it;
The bill will mature 60 days after the date of acceptance;
If B does not accept it, it is dishonoured for non-acceptance, and D may immediately seek payment from A or C;
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
If the bill is said to be payable at a fixed period after date, and the bill is undated, this is not fatal, because a holder may insert the ‘true date of issue’.
If the wrong date is inserted, a holder in due course may still obtain payment, on the date which should have been inserted, not on the incorrect date.
Dates on a bill are presumed to be correct unless the contrary is proved.
A bill which is ante-dated or post-dated is not invalid, and a post dated cheque is therefore valid as a bill, though it is not a true cheque because it is not payable on demand
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
An event which is not certain to happen, like a marriage, is a contingency, and a document specifying a contingency is not a valid bill.
If acceptance of a bill is the event, for example, this is a contingency which makes the document invalid as a bill.
Williamson v. Rider
The majority of the English CA came to the conclusion that an instrument expressed to be payable “on or before” a particular date is not valid because the phrase does not state a fixed or determinable time: the words give the payer an option to repay on any day of his choosing before the date.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
There must be a clear order to pay; even if the expression of the order is courteous, it must be a requirement and not a request.
Little v Slackford (1829) 1 M.&M. 171
An instrument in the form “please to let the bearer have £7…and you will oblige your humble servant……,” was held to be a mere request and not a demand on the bank.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A cheque may further provide that the instrument must be presented for payment within a certain period.
This does not make the instrument conditional, but once the given period has expired, the payee cannot insist on payment of the cheque as against the drawer, although the debt represented by it still remains owing.
An order requiring payment from a particular account or fund would not be valid, because there might be inadequate funds when payment was required.
An unconditional order to pay, however, coupled with an indication of a particular fund-e.g. a bill worded “pay C GhC x and debit my savings account” will be valid.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Where, however, the condition or requirement embodied in the cheque is not to be fulfilled by the drawee bank, but is a direction addressed to the payee, the order is unconditional
Nathan v. Ogden [1905] 94 L.T. 126
A cheque drawn in the ordinary form contained a clause requiring a receipt on the back of the cheque to be signed by the payee.
The court held that the condition requiring the payee’s signature on the receipt was addressed to the payee alone, and not to the bank; consequently in this case, the instrument was a cheque.
Thairlwall v. Great Northern Railway Company [1910] 2 K.B. 509
A dividend warrant contained a note that it would not be honoured after 3 months of the date of issue.
The court held that the instrument was a cheque and the note did not make the order conditional, since the words were merely a definition of what was considered a reasonable time within which the warrants were to be presented for payment, and it was in any case only a direction to the payee to present the cheque within that time.
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
An instrument which requires as a condition of payment of a receipt by the payee on the front or reverse of the document is not a negotiable instrument.
Bavins and Sims V London and South Western Bank [1990] 1 Q.B. 270
The plaintiff received an instrument in the form of a cheque which read: “Pay to….provided the receipt form at the foot is duly signed and dated”
The instrument was stolen from the plaintiff, an indorsement forged on it and the receipt form signed.
In an action by the plaintiff against the collecting bank, it was held that the instrument was not a cheque; it depended upon the receipt being signed and was not therefore an unconditional order.
If the bill is payable to Order (A will have specified that payment should be made to C or to order), C will have to indorse (sign) the bill to D to give a good tile.
C then becomes the first indorser of the bill and D becomes indorsee or holder.
If he or she has taken in good faith and for value and the bill itself is in order, D will become holder in due course (the holder in due course obtains title free of any equities-the equivalent of bona fide purchaser for value).
Order or to Bearer
The drawee, B (the bank here), will probably be asked to accept the bill as well as pay it.
If B accepts the bill by signing it, he or she will take primary responsibility for its payment.
Cheques, however, are not usually accepted; the bank merely acts as drawee and is not therefore liable to the payee for the money, (although it may breach its contractual duty to A, its customer, if it does not pay on his or her instructions).
Acceptance
)
.
HIRE-PURCHASE
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
General crossing
Where the cheque contains the two parallel lines simply it is a general crossing. 75(1)(b)
Where the cheque contains the two parallel lines with the words “not negotiable” it is a general crossing. Section 75(1) (b)
Where the cheque contains the two parallel lines plus the words “and company” or any abbreviation of same between the two parallel lines it is a general crossing. 75(1) (a)
Where the cheque contains the two parallel lines plus the words “and company” or any abbreviation of same between the two parallel lines with the words “not negotiable” it is a general crossing. 75(1)(a)
TYPES OF CROSSING
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Section 72 of Act 55 provides that a cheque is a bill of exchange drawn on a banker payable on demand.
Section 1(1) of Act 55 provides that “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 certain in money to or to the order of a specified person or to bearer.”
CHEQUES (INCLUDING MONEY ORDERS)
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
This is a promise to pay issued by a banker. By a certificate of deposit, a bank acknowledges that it has received a deposit from the depositor, and promises to repay the depositor upon demand.
Today, certificates of deposit are processed electronically.
CERTIFICATES OF DEPOSIT
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A promissory note is one kind of a Bill of Exchange. Section 83(1) of Act 55 defines a promissory note as 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, a sum certain in money to, or to the order of, a specified person or to bearer.
an unconditional promise
in writing
made by one person
to another
signed by the maker,
engaging to pay,
a sum certain in money
on demand, or at a fixed or determinable future time,
to, or to the order of, a specified person or to bearer
PROMISSORY NOTE
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
HOLDER
Act 55 defines very carefully what is meant by a 'holder of a bill'.
S. 97 says that holder “means the payee or endorsee of a bill or note who is in possession of it, or the bearer thereof”.
A person in possession of an unendorsed order bill is not a holder, though he gave value for the bill, and cannot sue in his own name. Good v. Walker (1892) 61 L.J.Q.B. 736.
However, by Section 29(4), such a person in possession of an unendorsed order bill, has the right to have the bill endorsed to him (Section 29(4); Cook v. Hoosain Mia (1912) 33 N.L.R. 12), and will become holder as from the date of endorsement, if subsequently made. Day v. Longhurst (1893) 62 L.J.Ch. 334.
A drawer of a bill to his own order (even if unendorsed), is the holder thereof (upon its acceptance). Walters v. Neary (1904) 21 T.L.R. 146
HOLDER, HOLDER FOR VALUE, HOLDER IN DUE COURSE
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
An endorsement may be made in blank or special or contain terms making it restrictive.
BLANK ENDORSEMENT
An endorsement in blank specifies no endorsee. Section 32(1)
A bill endorsed in blank becomes payable to bearer. See Sections 6(3)&32(1)
However, a bill endorsed in blank may be converted, by any holder, into a special endorsement by writing above the endorser’s signature a direction to pay the bill to or to the order of himself or some other person.
TYPES OF ENDORSEMENT
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
For endorsement to be effective it must satisfy certain conditions. These conditions as laid down in Section 30 of Act 55 include the following:-
It must be written on the bill itself and signed by the endorser. The simple signature of the endorser on the bill without additional words is sufficient. NOTE: An endorsement on an allonge or on a ‘copy’ of a bill issued or negotiated in a country where ‘copies’ are recognised, is deemed to be written on the bill itself.
It must be an endorsement of the entire bill. A partial endorsement does not operate as a negotiation of a bill. Thus an endorsement which purports to transfer to the endorsee a part only of the amount payable, or which purports to transfer the bill to two or more endorsees severally is not an effective or valid negotiation.
CONDITIONS FOR ENDORSEMENT
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Endorsement takes place when the name and/or the signature of the transferor is written on the instrument and it is completed by delivery to the transferee. Instruments payable to order can only be negotiated by endorsement of the holder and completed by delivery.
NOTE: Where a bill purports to be endorsed conditionally, the condition may be disregarded by the payer, and the payment to the endorsee is valid whether or not the condition is fulfilled. See Section 31 of Act 55.
ENDORSEMENT
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Sec. 6(2) provides that a bill may be payable either to order or to bearer.
BEARER BILLS
If the document is payable to any person who holds it, that is to the bearer, it can be negotiated, i.e., transferred with good title, merely by delivery.
Sec 6 (3) provides that a bill is payable to bearer which is expressed to be so payable or if the only or last endorsement is an endorsement in blank then the bill is a bearer bill. That is if the bill does not contain or mention any name. Also where there are number of endorsements and the last endorsement is an endorsement in blank.
ORDER BILLS
If it is payable to a named person or to his order that is, an order bill, then that person must sign on the reverse side or indorse it in order to make the instrument capable of being negotiated by delivery to the next holder.
Sec 6(4) of Act 55 provides that a bill is payable to order which is expressed to be so payable or expressed to be payable to a particular person. In addition it must not contain words prohibiting transfer or indicating an intention that is should not be transferable. An order bill is negotiable and thus freely transferable.
BEARER BILL AND ORDER BILL
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
In order that the holder of a negotiable instrument may have all the rights which such a document can give, the following conditions must be satisfied:
Value must have been given - this is the principle of consideration found in the law of contract and which evidences that the agreement of the parties is a bargain. S. 25(1) (a).
However, in the case of negotiable instruments past consideration is good consideration, for example, a cheque is valid even if issued in settlement of an existing debt. S. 25(1) (b).
If the present holder of the instrument has not himself given value but some previous holder had done so, the holder is a holder for value and he is given some measure of protection. S. 25(2).
Every party whose signature appears on the bill is prima facie deemed to have given value s. 28(1).
Secondly, the holder of the instrument must have acted in good faith i.e. honestly, without knowledge of any defect in title of a previous holder. S. 90 of Act 55 says that a thing is deemed to be done in good faith where it is in fact done honestly, whether it is done negligently or not.
Thirdly, the instrument must be complete and regular – that is, the instrument must appear to be in order on the face of it:
It must not be overdue or show signs of unauthorized alterations.
The fourth requirement is that instrument must be deliverable (i.e., capable of transfer by being physically handed over).
REQUIREMENTS OF NEGOTIABILITY
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill s. 29(1).
A bill payable to bearer is negotiated by delivery s. 29(2)
A bill payable to order is negotiated by the endorsement of the holder completed by delivery s.29 (3).
A person who acquires a negotiable instrument for value and in good faith is entitled to ignore all previous claims to the document.
The most important type of negotiable instrument is the Bill of Exchange: a Cheque is a kind of bill of exchange.
The extensive body of case law and customary rules concerning bills of exchange is codified in the Bills of Exchange Act 1960, (Act 55).
NEGOTIATING A BILL
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
If a drawer draws a bill payable to a third party, it is a contract by the drawer to pay the payee, his order, or the bearer, as the case may be, conditionally on the acceptor’s (or drawee’s) failing to do so.
The legal effect of accepting a bill, is an absolute contract, on the part of the acceptor to pay the payee, his order, or the bearer as the instrument may require.
The legal effect of making a note, is an absolute contract, on the part of the maker to pay the payee, his order, or the bearer as the instrument may require.
The legal effect of indorsing a bill is a conditional contract, on the part of the indorser, to pay the immediate or any succeeding indorsee, or bearer, in case of the acceptor’s default.
The legal effect of indorsing a promissory note is a conditional contract, on the part of the indorser, to pay the immediate or any succeeding indorsee, or bearer, in case of the maker’s default.
LEGAL EFFECT OF DRAWING OR INDORSING A BILL
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill may be accepted conditionally and such conditional or qualified acceptance is valid. – Section 17(1)&(2)
A drawer of a bill and any endorser may qualify in any way he pleases, his liability to the holder. – Section 14(a)
Payment must not depend on a contingency. E.g., Pay A (or We promise to pay A) the sum of $20,000,000 if an event occurs:
(We promise to pay …, on the death of George , provided he leaves either of us sufficient money to pay the said sum, or if we shall be otherwise able to pay it.)
After someone marries.
After someone gives birth
After complying with certain terms
On the sale of goods, produce or property
On the honouring of drafts (or cheques) given to us by B which said drafts fall due on (a future date) (say, April 10, 2007).
30 days after the arrival of the ship Paragon at Tema
[All these examples are contingencies as they may or may not occur. Thus if payment is conditioned on any such contingency, the instrument will be an invalid bill -- void.]
NOTE
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
BILLS OF EXCHANGE
Section 1(1) of the Bills 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 certain in money to or to the order of a specified person, or to bearer.”
DETAIL DISCUSSION OF THE VARIOUS NEGOTIABLE INSTRUMENTS
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
CHEQUES (INCLUDING MONEY ORDERS)
“A cheque is a bill of exchange drawn on a banker payable on demand”.
Section 72 of the Bills of Exchange Act (Act 55)
BILLS OF EXCHANGE
“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 certain in money to or to the order of a specified person, or to bearer.”
(Section 1(1) of the Bills of Exchange Act, 1961 (Act 55))
Thus if payment is conditioned on any contingency, the instrument will be an invalid bill.
ORDERS TO PAY
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
CERTIFICATE OF DEPOSIT
This is a promise to pay issued by a banker. By a certificate of deposit, a bank acknowledges that it has received a deposit from the depositor, and promises to repay the depositor upon demand.
PROMISSORY NOTE
A promissory note is “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, a sum certain in money, to, or to the order of, a specified person or to bearer.”
Section 83(1) of Act 55
PROMISE TO PAY
ROWLAND ATTA-KESSON ESQ. LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
DRAWER
The drawer is the party who draws a negotiable instrument.
DRAWEE
The drawee is the party on whom the instrument is drawn.
ACCEPTOR
When a drawee of a negotiable instrument signifies his assent to the order of the drawer, he becomes the acceptor of the instrument.
DEFINITION OF KEY TERMS:
[Section 97 of Act 55]
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
PROMISES TO PAY
Those that are promises to pay money
e.g. promissory notes and certificates of deposit
ORDERS TO PAY
Those that are orders to pay money
E.g. cheques, drafts, bills of exchange, etc. 

LET US NOW CONSIDER A FEW KEY TERMS RELATING TO NEGOTIABLE INSTRUMENTS BEFORE WE LOOK AT THESE TWO (2) CLASSES CLOSELY.
CLASSES OF NEGOTIABLE INSTRUMENTS:
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
The parties who sign a bill undertake liabilities which interlock and can be thought of as a chain of liabilities and rights.
A transaction with a bill payable at a future date to a specified payee who specially indorsees it to another person can be described in stages in this way:
HOW PARTIES USE THE BILL
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill is payable to bearer when it explicitly says “pay bearer” or when the last or only indorsement is an indorsement in blank-that is, when the last indorser has simply written has simpley written his or her signature on the back of the bill without specifying any person to whom the bill is to be transferred.
A bearer has the effect that any person in possession of the bill may transfer it without indorsement.
A bona fide transferee obtaining the bill, even from a thief, has good title to it, and to the acceptor, if acting in good faith, obtains a good discharge by payment to him or her. There are obvious risks in such a bill.
Bearer bill
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill or cheque must specify the person who is entitled to be paid-the payee, who may be a particular named person, or the bearer, the person in possession of the instrument
If the bill is an order bill-e.g. if it states “pay A” or “pay A or order”-the person named may present the instrument for payment or may negotiate it to another person
The latter case there must be an intention to transfer the property, coupled with the delivery of the instrument.
If the order bill has been made non-transferable, however, by words such as “pay A only” or “not transferable” it may not be negotiated.
To or to the order of a specified person or bearer
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill or cheque may be drawn or negotiated for any sum of money but it must be for a certain sum, which normally is expressed in both words and figures.
A sum certain in money
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill may be said to be payable at a fixed period after date or sight.
If it is after sight (eg 90 days after sight) this means that it becomes mature and therefore payable only on the day which is 90 days after acceptance or protest for non-acceptance.
Similarly, if it is payable at a fixed period after an event which is bound to happen (even if the date of is uncertain), it is valid.
At a fixed or determinable future time
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill is payable on demand-that is, immediately-either when it is expressed to be payable, or when it is payable at sight or on presentation, or when no time for payment is expressed.
Payable at sight means that it is payable when it is seen for acceptance or for payment. (This differs from payable after sight)
To pay on demand
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
A bill or cheque, to be a valid instrument, must be signed by the person giving it (the drawer) or a person authorized by him or her.
The instrument is not complete until the drawer has signed it, so that a cheque form which is otherwise complete is not valid cheque until signed by the drawer or his her agent.
The ‘mark’ of a person who is illiterate is a satisfactory signature.
Signed by the drawer
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
There must be on e person as drawer, and another, usually a bank, as drawee.
The drawee must be named with reasonable certainty, and may be an individual or a company.
There may be one drawee or joint drawees, but not drawees in the alternative or in succession.
If the drawer and drawee are the same person, the holder may treat the instrument either as a bill of exhange or a promissory note.
Addressed by one person to another
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
Writing include typewriting and printing, although in practice this may be discouraged by banks because of the ease with typewritten or printed cheques can be fraudulently altered.
The writing does not have to be in ink, but a customer who writes a cheque by hand would probably facilitate fraud by drawing it in pencil, and might therefore be negligent; the bank would probably return it unpaid. The writing does not have to be on paper, although it must not be written on metal
In Writing
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
This means that there must be no qualification which would make payment uncertain or give rise to cumbersome inquiries
E.g. a bill which specified “pay C when he passes his exams” would not be valid even if C did pass his exams:
One which sadi “pay C’s estate on C’s death” however, would be-death is not uncertain, although the time at which it happens, of course, is.
Unconditional order
ROWLAND ATTA-KESSON ESQ.
LLB. BL(Ghana); PPM. LLM.(MCL) (Indiana)
From the definition above, other requirements must be satisfied:
It must be unconditional
In writing
Signed by the drawer
It may be payable on demand or
At fixed or determinable future time, and
Amount must be certain in money
If the document does not satisfy all of these, it will not amount to a bill of exchange and the transferee will not obtain all the rights granted on the negotiation of a negotiable instrument
THE FORM OF BOE
ROW
A bill may order the payment to be made at some future date, and the payee, C, may not wish to wait until the date of its maturity and may prefer to sell it to someone else, probably at a discount.
A bill which has been accepted by a reliable person or institution, such as a bank, will provide assurance of payment at maturity, and C will be able to negotiate its sale (which will almost certainly be at a discount because ready money is given for a right of payment in the future) to another person, D.
Negotiation
Transactions regulated by the
Hire-Purchase Act, 1974 (NRCD 292)
Previously regulated by Sale of Goods Act 137 (66-75)
Subsequently Amended in 1978
What constitute a Hire-Purchase? Section 24 of NRCD 292
An
Agreement
for the
bailment of goods
under which the bailee
may buy the goods or under which the property in the goods will or may pass to the bailee;
and

Two or more agreements, none of which by itself constitutes a hire-purchase agreement in which there is a bailment of goods and either the bailee may buy the goods or the property in them will or may pass to the bailee the agreements shall be treated for the purposes of this Act as a single hire-purchase agreement made at the time when the last of the agreements was made.
HIRE-PURCHASE
DEFINITION
Requirements for the Validity of Hire-Purchase
Agreement
1. Agreement in Writing signed by the hirer or buyer

2. Stating orally and in writing to the prospective buyer or hirer, otherwise than in the agreement the
price
at which the goods may be purchased for
cash
and the
hire-purchase price or total purchase price.
Menzies v. United Motor Finance Corporation [1940] 1 K.B. 559 at pp. 568-569.

3. The agreement shall contain
a. statement of
the cash price
and the
hire-purchase price
or total purchase price of the goods;
b. the
amount of each installment by which the price is to be paid and the date or the mode of determining the date on which each installment is payable;
c.
a description or list of the goods to which the agreement relates sufficient to identify the goods;

SEE SECTION 1-3 of NRCD 292 and
Tradomex v. Baah (1968) C.C. 17
ESSENTIALS OF A HIRE-PURCHASE AGREEMENT
A Hire-Purchase Agreement cannot contain the following:

See Parliamentary Hansard on Sale of Goods Act
1.An owner or seller can
enter unto private property to recovery the goods

2. Limitations on the right to terminate.
See Section 5

3. A provision that the hirer, after the termination of the hire-purchase agreement or the bailment is subject to a liability which exceeds the liability to which the hirer would have been subject if the agreement had been terminated by the hirer under this Act.

4. A provision that a person acting on behalf of an owner or a seller in connection with a hire-purchase or conditional sale agreement
is treated as or deemed to be an agent of the hirer or buyer.
See section 4 of NRCD 292 and Section 23 of NCRD 292
Read
TRANSPORT HIRE PURCHASE LTD. v. DEDE [1992] 2 GLR 58
Distinguishing Hire-Purchase from other transactions for installment payments
Credit Sale vs. Hire Purchase:
Mode of Property passing. Whereas in credit sales the property passes when part of the payment is made, in a hire purchase, there is a option for the property in the goods to pass.
Hire Purchase Agreement must be in writing...Credit Sale can be oral
There is no need for the requirement of Statutory Notice under a Hire Purchase Agreement in a Credit Sale.
Work and Pay? Hire Purchase...Any Difference?
Read S.K Brobbey Article on Hire Purchase. 1970 Review of Ghana Law. TRANSPORT HIRE PURCHASE LTD. v. DEDE [1992] 2 GLR 58
Restrictions on recovery of goods under Hire-Purchase
The owner or seller shall not enforce a right to recover possession of
protected goods
from the hirer or buyer otherwise than by an action in court.
Recovery of protected goods without an action terminates the Hire Purchase Agreement
Goods let under a hire-purchase agreement or sold under a conditional sale agreement,
One-half of the price or total purchase price of which has been paid, and
The hirer or buyer has not terminated the hire-purchase agreement or conditional sale agreement,

“protected goods” are goods
See Section 8 and 9 of NCRD 292

EKUONA CONSTRUCTION CO. LTD. v. BANK FOR HOUSING AND CONSTRUCTION
[1992] 2 GLR 227
INTERNATIONAL SALE OF GOODS
Regulated by the International Convention on the Sale of Good
Signed in Vienna in 11th April 1980 under the UNCITRAL.
Came into force on the 1st of January 1988
Ghana has signed 11th April 1980 but has not ratified?!! 7th Oct, 97
Introduction
CISG Framework

• Part II: Formation of the Contract (Articles 14 to 24)
• Part III: Sale of Goods (Articles 25 to 88)
• Part IV: Final Provisions (Articles 89 to 101)


Part I: Sphere of Application and General Provisions (Articles 1 to 13)
See handout for advantages and disadvantages of the CISG!!!
Future of CISG
Train more lawyers in the area of ICSG
Make it attractive to Businessmen
UNCITRAL more solid platform for dispute resolution
NEGOTIABLE INSTRUMENTS NEXT WEEK
Full transcript