Research Paper Number

26/2014

Document Type

Article

Publication Date

2014

Keywords

Law; Money; Canadian Bill of Exchange Act; Banking

Abstract

The Canadian Bill of Exchange Act (the Act), covering bills of exchange (bills), cheques, and promissory notes (notes), is modeled on its counterpart in England (the English Act). It was first adopted in Canada in 1890 and, while it has been amended several times, has never been substantially overhauled during the intervening 120 years. One judge described the English Act as "the best drafted Act of Parliament ever passed." Nevertheless, over the years, some contentious issues have arisen in connection with its interpretation while other provisions have become obsolete. Even so, considering the overall operation of the Act, one can conclude that, as a codification of the law of negotiable instruments, it has served its purpose well. I do not propose repealing the Act or replacing it with a new statute. Rather, the purpose of this paper is to identify points to be addressed in specific amendments to the existing Act and designed to clarify and improve the law of negotiable instruments. This approach will retain the Act's connection with English law, including the extensive jurisprudence that has evolved over the years throughout the Commonwealth and in other countries with similar legislation. It should be pointed out that the Act has not functioned as a codification of the law of payment systems or funds transfers. Thus, while it provides for cheques as instruments, it is not a comprehensive code covering cheque collection; nor does it cover other methods for the transfer of funds from one bank account to another. The proposed amendments are not intended to be a substitute for the badly needed and long overdue codification of a more general funds transfer law.

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