Cheques Act 1986
No. 145, 1986
Compilation No. 13
Compilation date: 1 March 2017
Includes amendments up to: Act No. 61, 2016
Registered: 7 March 2017
This compilation includes a commenced amendment made by Act No. 11, 2016
About this compilation
This compilation
This is a compilation of the Cheques Act 1986 that shows the text of the law as amended and in force on 1 March 2017 (the compilation date).
The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.
Uncommenced amendments
The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.
Application, saving and transitional provisions for provisions and amendments
If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.
Editorial changes
For more information about any editorial changes made in this compilation, see the endnotes.
Modifications
If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.
Self‑repealing provisions
If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.
Contents
Part I—Preliminary
1 Short title
2 Commencement
3 Interpretation
4 Application of rules in bankruptcy, laws of States and Territories and rules of the common law
5 Cheques a financial institution draws on itself
6 Certain rights, duties and liabilities under Act may be altered by agreement
7 Application of Act
8 Extension of Act to external Territories
9 Act binds the Crown
Part II—Cheques
Division 1—Form
10 Cheque defined
11 Order to pay
12 Unconditional order to pay
13 Order addressed to a financial institution
14 Order to pay on demand
15 Order to pay a sum certain
16 Date of cheque etc.
17 Optional stipulations
18 Inchoate instruments
Division 2—Order and bearer cheques
19 Meaning of specification of person in cheque as payee or indorsee
20 Cheques either payable to order or to bearer
21 Cheques payable to order
22 Cheques payable to bearer
23 Conversion of cheque payable to bearer into cheque payable to order
24 Cheques payable to order of specified person
Division 3—Delivery
25 Delivery essential for drawing or indorsement
26 Requisites for effective delivery
27 Drawing or indorsement may be shown…
Overview
The Cheques Act 1986 was enacted to provide a legal framework governing the use and negotiation of cheques in Australia. The Act addresses the gap in regulation of cheques by establishing a set of rules that govern the creation, delivery, transfer, and settlement of cheques, as well as the liabilities of the parties involved in the cheque process. The Act was passed by the Commonwealth Parliament and applies to cheques drawn on or after its commencement on 1 July 1987. The primary objective of the Cheques Act 1986 is to provide a clear and consistent legal basis for the use of cheques in financial transactions, ensuring that the rights and obligations of the drawer, drawee, and other parties are well-defined and protected.
Scope and Application
The Cheques Act 1986 applies to cheques drawn on or after the day on which the Act comes into operation. The Act applies to cheques drawn on financial institutions within the meaning of the Act. This includes the Reserve Bank of Australia, authorised deposit-taking institutions (ADIs), persons who carry on State banking, and other persons who carry on the business of banking outside Australia. The Act also applies to cheques that a financial institution draws on itself, subject to certain exclusions. The Act extends to every external Territory and binds the Crown in each of its capacities. The Act governs the form, negotiation, presentment, dishonour, and liabilities related to cheques. It includes provisions for the protection of financial institutions in certain situations, such as when cheques are presented or collected by financial institutions, including FCA institutions. The Act also addresses issues related to agency cheques and includes miscellaneous provisions concerning cheques, lost or destroyed cheques, and conflicts of laws. The Governor-General may make regulations to prescribe matters required or permitted by the Act or necessary or convenient to carry out or give effect to the Act.
Key Provisions
- The Cheques Act 1986 governs the use and legal implications of cheques in Australia. The Act specifies the form, negotiation, and presentment of cheques, as well as the rights and obligations of parties involved in cheque transactions. Key sections include definitions of cheques (s. 10), the requirement for cheques to be unconditional orders to pay (s. 12), and the procedures for indorsement and transfer (ss. 41-49). The Act also mandates that cheques must be presented for payment to hold parties liable (s. 58) and outlines the consequences of dishonour (ss. 69-70). Obligations imposed by the Act require parties to ensure cheques are validly drawn and indorsed (ss. 31-34), and institutions to promptly present and pay cheques (ss. 66-67). Breaches of the Act can result in civil liabilities for dishonoured cheques and, in some cases, criminal penalties for fraud or forgery related to cheques. For instance, the Act provides for damages in the event of cheque dishonour (s. 76) and outlines the procedures for replacing lost or destroyed cheques (s. 115).
- Area of Law
- Commercial Law
- Contract Law
- Financial Law & Services
- Payment Systems & Instruments
- Instrument
- Act
- Concepts
- Definitions & Interpretation
- Commencement Provisions
- Repeal & Amendment
- Regulatory Standards
- Licensing & Registration
- Civil Penalty Provisions
- Enforcement Powers