Bills of Exchange Act 1971

Administered by Department of the Treasury

Legislation au C1971A00004 Not in force Act

Legislation content

Bills of Exchange

No. 4 of 1971

An Act to amend the Bills of Exchange Act 1909–1958.

[Assented to 12 March 1971]

BE it enacted by the Queen’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia, as follows:—

Short title and citation.

1.—(1.) This Act may be cited as the Bills of Exchange Act 1971.

(2.) The Bills of Exchange Act 1909–1958 is in this Act referred to as the Principal Act.

(3.) The Principal Act, as amended by this Act, may be cited as the Bills of Exchange Act 1909–1971.

Commencement.

2. This Act shall come into operation on a date to be fixed by Proclamation.

3. Section 3 of the Principal Act is repealed and the following section inserted in its stead:—

Parts.

“3. This Act is divided into Parts, as follows:—

Part I.—Preliminary (Sections 1–7).


Part II.—Bills of Exchange.

Division 1.—Form and Interpretation (Sections 8–26).

Division 2.—Capacity and Authority of Parties (Sections 27–31).

Division 3.—The Consideration for a Bill (Sections 32–35).

Division 4.—Negotiation of Bills (Sections 36–43).

Division 5.—General Duties of the Holder (Sections 44–57).

Division 6.—Liabilities of Parties (Sections 58–63).

Division 7.—Discharge of Bill (Sections 64–69).

Division 8.—Acceptance and Payment for Honour (Sections 70–73).

Division 9.—Lost Instruments (Sections 74–75).

Division 10.—Bill in a Set (Section 76).

Division 11.—Conflict of Laws (Sections 77–77a).

Part III.—Cheques on a Banker.

Division 1.—Cheques Generally (Sections 78–81).

Division 2.—Crossed Cheques (Sections 82–88a).

Division 3.—Other Provisions relating to Cheques (Sections 88b–88e).

Part IV.—Promissory Notes (Sections 89–95).

Part V.—Supplementary (Sections 96–101).”.

Protection to collecting banker.

4. Section 88 of the Principal Act is repealed.

5. After section 88a of the Principal Act the following Division is inserted:—

“Division 3.—Other Provisions relating to Cheques.

Protection of bankers paying unindorsed or irregularly indorsed cheques or drafts.

“88b.—(1.) Where a banker in good faith and in the ordinary course of business pays to another banker a cheque drawn on the first-mentioned banker that is not indorsed, is irregularly indorsed or has been indorsed without authority—

(a) the first-mentioned banker does not, in paying the cheque, incur any liability by reason only of the absence of, or irregularity in, indorsement or his failure to concern himself with the existence of authority for indorsement; and

(b) he shall be deemed to have paid the cheque in due course.

“(2.) Where a banker in good faith and in the ordinary course of business pays to another banker a draft drawn by the first-mentioned banker upon himself and payable on demand, whether the draft is payable at the head office or at some other office of the banker—

(a) the first-mentioned banker does not, in paying the draft, incur any liability by reason only of the absence of, or irregularity in,


indorsement or his failure to concern himself with the existence of authority for indorsement; and

(b) the payment discharges the draft.

“(3.) For the purposes of the last two preceding sub-sections, a banker who—

(a) has paid a cheque drawn on him or a draft drawn by him upon himself; and

(b) has credited the account of a customer with the amount of the cheque or draft,

shall be deemed to have paid the cheque or draft to another banker.

Payment of unindorsed cheque or draft as evidence of receipt by payee.

“88c.—(1.) An unindorsed cheque payable to order that appears to have been paid by the banker on whom it is drawn is evidence of the receipt by the payee of the sum payable by the cheque.

“(2.) The last preceding sub-section applies in relation to a draft drawn by a banker upon himself and payable on demand, whether the draft is payable at the head office or at some other office of the banker, as it applies in relation to a cheque.

Protection of bankers collecting payment of cheques, &c.

“88d.—(1.) Where—

(a) a banker, in good faith and without negligence—

(i) receives payment for a customer of a cheque; or

(ii) having credited a customer’s account with the amount of a cheque, receives payment of the cheque for himself; and

(b) the customer has no title, or has a defective title, to the cheque, the banker does not incur any liability to the true owner of the cheque by reason only of having received payment of the cheque.

“(2.) Subject to the next succeeding sub-section, a banker shall not be treated for the purposes of this section as having been negligent by reason only of his failure to concern himself with the absence of, or irregularity in, indorsement of a cheque.

“(3.) The last preceding sub-section does not apply in relation to a cheque unless the name appearing on the cheque as the name of the payee—

(a) is the same as the name of the customer; or

(b) is so similar to the name of the customer that it was reasonable, in all the circumstances, for the banker to assume that the customer was the person intended by the drawer to be the payee.

“(4.) This section applies in relation to a draft drawn by a banker upon himself and payable on demand, whether the draft is payable at the head office or at some other office of the banker, as it applies in relation to a cheque.


Rights of banker collecting cheque not indorsed by payee.

“88e. A banker who gives value for, or has a lien on, a cheque payable to order that the payee, without indorsing the cheque, delivers to the banker for collection for the payee has such rights (if any) as he would have had if, upon the delivery of the cheque to him, the payee had indorsed it in blank.”.

 

Overview

The Bills of Exchange Act 1971 was enacted by the Parliament of Australia to amend the Bills of Exchange Act 1909–1958, thereby providing updated regulations for the negotiation of bills of exchange and related instruments such as cheques and promissory notes. The primary aim of the Act is to modernise and clarify the law governing negotiable instruments to better reflect contemporary business practices. This Act, which came into effect on a date specified by Proclamation, introduces protections for bankers who handle cheques and drafts, particularly those that are unindorsed or irregularly indorsed. By enacting this legislation, the Australian Parliament aimed to reduce the liability of bankers who act in good faith and within the ordinary course of business, thus facilitating smoother transactions and protecting financial institutions from undue legal risks.

Scope and Application

The Bills of Exchange Act 1971 is a Commonwealth Act that amends the existing Bills of Exchange Act 1909–1958, providing updated provisions governing bills of exchange, cheques, promissory notes, and related financial instruments. The Act applies to individuals and entities engaged in transactions involving these instruments, primarily focusing on the obligations, liabilities, and rights of parties involved, such as drawer, drawee, and payee. It also addresses the negotiation, acceptance, and payment processes for cheques and other negotiable instruments, including special provisions for bankers collecting cheques. The Act's geographic reach is nationwide, applicable throughout the Commonwealth of Australia. There are no specific exclusions or thresholds mentioned in the text, but it is likely that the Act’s provisions extend or may be restricted through subordinate instruments or regulations, which are not detailed in the provided excerpt.

Key Provisions

The Bills of Exchange Act 1971 introduces significant amendments to the existing Bills of Exchange Act 1909–1958. The Act, as amended, is now referred to as the Bills of Exchange Act 1909–1971, and it is structured into various parts that cover different aspects of bills of exchange, cheques, promissory notes, and supplementary provisions. Section 3 of the Act delineates the Act into Parts, including preliminary provisions, the specifics of bills of exchange, and supplementary provisions, among others. The Act imposes several obligations and requirements on parties and entities involved with bills of exchange, cheques, and promissory notes. For instance, Section 88b provides protection to bankers who, in good faith and in the ordinary course of business, pay unindorsed or irregularly indorsed cheques or drafts. This means that if a banker pays such a cheque or draft without concern for the absence or irregularity of the indorsement, they do not incur any liability. Similarly, Section 88c stipulates that an unindorsed cheque that appears to have been paid by the banker is evidence of the payee receiving the sum payable. Furthermore, Section 88d protects bankers from liability when they receive payment for a cheque on behalf of a customer who lacks title to the cheque, provided the banker acted in good faith and without negligence. There are also specific consequences for breaches of the Act's provisions. While the Act does not explicitly state penalties for breaches, it is understood that failure to comply with the outlined obligations could lead to civil liabilities. For example, if a banker negligently pays a cheque to someone who is not the rightful payee, they could be held liable for any losses incurred by the true owner of the cheque. Additionally, the Act's provisions on cheques and bills of exchange are crucial for ensuring that financial transactions are conducted smoothly and securely, with clear guidelines to protect both parties involved.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.