Bills of Exchange Act (R.S.C., 1985, c. B-4)

Marginal note:By drawer

• 169 (1) A cheque may be crossed generally or specially by the drawer.

• Marginal note:By holder

  (2) Where a cheque is uncrossed, the holder may cross it generally or specially.

• Marginal note:Varying

  (3) Where a cheque is crossed generally, the holder may cross it specially.

• Marginal note:Words may be added

  (4) Where a cheque is crossed generally or specially, the holder may add the words “not negotiable”.

• Marginal note:By bank for collection

  (5) Where a cheque is crossed specially, the bank to which it is crossed may again cross it specially to another bank for collection.

• Marginal note:Changing crossing

  (6) Where an uncrossed cheque, or a cheque crossed generally, is sent to a bank for collection, it may cross it specially to itself.

• Marginal note:Uncrossing

  (7) A crossed cheque may be reopened or uncrossed by the drawer writing between the transverse lines the words “pay cash”, and initialling the same.

Marginal note:Material part

• 170 (1) A crossing authorized by this Act is a material part of the cheque.

• Marginal note:Altering crossing

  (2) It is not lawful for any person to obliterate or, except as authorized by this Act, to add to or alter the crossing.

Marginal note:Crossed to more than one bank

171 Where a cheque is crossed specially to more than one bank, except when crossed to another bank as agent for collection, the bank on which it is drawn shall refuse payment thereof.

Marginal note:Liability for improper payment

• 172 (1) Subject to subsection (2), where the bank on which a cheque crossed as described in section 171 is drawn nevertheless pays the cheque, or pays a cheque crossed generally otherwise than to a bank, or, if crossed specially, otherwise than to the bank to which it is crossed or to the bank acting as its agent for collection, it is liable to the true owner of the cheque for any loss he sustains owing to the cheque having been so paid.

• Marginal note:Payment in good faith and without negligence

  (2) Where a cheque is presented for payment that does not at the time of presentment appear to be crossed, or to have had a crossing that has been obliterated, or to have been added to or altered otherwise than as authorized by this Act, the bank paying the cheque in good faith and without negligence shall not be responsible or incur any liability, nor shall the payment be questioned by reason of the cheque having been crossed, or of the crossing having been obliterated or having been added to or altered otherwise than as authorized by this Act, and of payment having been made otherwise than to a bank or to the bank to which the cheque is or was crossed, or to the bank acting as its agent for collection, as the case may be.

Marginal note:Protection in such case

173 Where the bank on which a crossed cheque is drawn in good faith and without negligence pays it, if crossed generally, to a bank, or, if crossed specially, to the bank to which it is crossed or to a bank acting as its agent for collection, the bank paying the cheque and, if the cheque has come into the hands of the payee, the drawer shall respectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof.

Marginal note:“Not negotiable” cross

174 Where a person takes a crossed cheque that bears on it the words “not negotiable”, he does not have and is not capable of giving a better title to the cheque than the person from whom he took it had.

Marginal note:Customer without title

175 Where a bank, in good faith and without negligence, receives for a customer payment of a cheque crossed generally or specially to itself and the customer has no title or a defective title thereto, the bank does not incur any liability to the true owner of the cheque by reason only of having received that payment.

PART IVPromissory Notes

Marginal note:Definition

• 176 (1) A promissory note is an unconditional promise in writing made by one person to another person, 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.

• Marginal note:Endorsed by maker

  (2) An instrument in the form of a note payable to the maker’s order is not a note within the meaning of this section, unless it is endorsed by the maker.

• Marginal note:Pledge of collateral security

  (3) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof.

Marginal note:Inland note

• 177 (1) A note that is, or on the face of it purports to be, both made and payable within Canada is an inland note.

• Marginal note:Foreign note

  (2) Any other note is a foreign note.

Marginal note:Delivery

178 A note is inchoate and incomplete until delivery thereof to the payee or bearer.

Marginal note:Joint and several liability

• 179 (1) A note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally, according to its tenor.

• Marginal note:Individual promise

  (2) Where a note bears the words “I promise to pay” and is signed by two or more persons, it is deemed to be their joint and several note.

Marginal note:Demand note presentment

• 180 (1) Where a note payable on demand has been endorsed, it must be presented for payment within a reasonable time of the endorsement.

• Marginal note:Reasonable time

  (2) In determining what is a reasonable time, regard shall be had to the nature of the instrument, the usage of trade and the facts of the particular case.

Marginal note:Endorser discharged

181 Where a note payable on demand that has been endorsed is not presented for payment within a reasonable time, the endorser is discharged but, if it has, with the assent of the endorser, been delivered as a collateral or continuing security, it need not be presented for payment so long as it is held as such security.

Marginal note:Not deemed overdue

182 Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue.

Marginal note:Presentment at particular place

• 183 (1) Where a note is, in the body of it, made payable at a particular place, it must be presented for payment at that place.

• Marginal note:Liability of maker

  (2) In the case described in subsection (1), the maker is not discharged by the omission to present the note for payment on the day that it matures, but if any suit or action is instituted thereon against him before presentation, the costs thereof are in the discretion of the court.

• Marginal note:Note payable generally

  (3) When no place of payment is specified in the body of the note, presentment for payment is not necessary in order to render the maker liable.

Marginal note:Liability of endorser

• 184 (1) Presentment for payment is necessary in order to render the endorser of a note liable.

• Marginal note:Presentment at particular place

  (2) Where a note is, in the body of it, made payable at a particular place, presentment at that place is necessary in order to render an endorser liable.

• Marginal note:Presentment elsewhere

  (3) When a place of payment is indicated by way of memorandum only, presentment at that place is sufficient to render the endorser liable, but a presentment to the maker elsewhere, if sufficient in other respects, shall also suffice.

Marginal note:Effect of being maker

185 The maker of a note, by making it,

• (a) engages that he will pay it according to its tenor; and

• (b) is precluded from denying to a holder in due course the existence of the payee and his then capacity to endorse.

Marginal note:Application of Act to notes

• 186 (1) Subject to this Part, and except as provided by this section, the provisions of this Act relating to bills apply, with such modifications as the circumstances require, to notes.

• Marginal note:Terms corresponding

  (2) In the application of the provisions of this Act relating to bills, the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first endorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer’s order.

• Marginal note:Provisions inapplicable

  (3) The provisions of this Act with respect to bills and relating to

  • (a) presentment for acceptance,

  • (b) acceptance,

  • (c) acceptance under protest, and

  • (d) bills in a set,

  do not apply to notes.

Marginal note:Protest of foreign notes

187 Where a foreign note is dishonoured, protest thereof is unnecessary, except for the preservation of the liabilities of endorsers.

PART VConsumer Bills and Notes

Marginal note:Definitions

188 In this Part,

consumer purchase

consumer purchase means a purchase, other than a cash purchase, of goods or services or an agreement to purchase goods or services

• (a) by an individual other than for resale or for use in the course of his business, profession or calling, and

• (b) from a person who is engaged in the business of selling or providing those goods or services; (achat de consommation)

goods

goods means any article that is or may be the subject of trade or commerce, but does not include land or any interest therein; (marchandises)

purchaser

purchaser means the individual by whom a consumer purchase is made; (acheteur)

seller

seller means the person from whom a consumer purchase is made; (vendeur)

services

services includes repairs and improvements. (services)

Marginal note:Consumer bill

• 189 (1) A consumer bill is a bill of exchange issued in respect of a consumer purchase and on which the purchaser or any person signing to accommodate the purchaser is liable as a party, but does not include

  • (a) a cheque that is dated the date of its issue or prior thereto, or at the time it is issued is post-dated not more than thirty days; or

  • (b) a bill of exchange that

    • (i) would be a cheque within the meaning of section 165 but for the fact that the party on which it is drawn is a financial institution, other than a bank, that as part of its business accepts money on deposit from members of the public and honours any such bill directed to be paid out of any such deposit to the extent of the amount of the deposit, and

    • (ii) is dated the date of its issue or prior thereto, or at the time it is issued is post-dated not more than thirty days.

• Marginal note:Consumer note

  (2) A consumer note is a promissory note

  • (a) issued in respect of a consumer purchase; and

  • (b) on which the purchaser or any one signing to accommodate him is liable as a party.

• Marginal note:Presumption as to issue

  (3) Without limiting or restricting the circumstances in which, for the purposes of this Part, a bill of exchange or a promissory note shall be considered to be issued in respect of a consumer purchase, a bill of exchange or a promissory note shall be conclusively presumed to be so issued if

  • (a) the consideration for its issue was the lending or advancing of money or other valuable security by a person other than the seller, in order to enable the purchaser to make the consumer purchase; and

  • (b) the seller and the person who lent or advanced the money or other valuable security were, at the time the bill or note was issued, not dealing with each other at arm’s length within the meaning of the Income Tax Act.

• Marginal note:Application of Act to consumer bills and notes

  (4) Except as otherwise provided in this Part, the provisions of this Act applicable to bills of exchange and cheques apply, with such modifications as the circumstances require, to consumer bills, and those applicable to promissory notes apply to consumer notes, with such modifications as the circumstances require.

Marginal note:Consumer bill or note to be marked

• 190 (1) Every consumer bill or consumer note shall be prominently and legibly marked on its face with the words “Consumer Purchase” before or at the time when the instrument is signed by the purchaser or by any person signing to accommodate the purchaser.

• Marginal note:Effect where not marked

  (2) A consumer bill or consumer note that is not marked as required by this section is void, except in the hands of a holder in due course without notice that the bill or note is a consumer bill or consumer note or except as against a drawee without that notice.