Bills of Exchange Act 1882

Summary

The Bills of Exchange Act 1882 codified the common law on negotiable instruments and remains the foundational statute for bills of exchange, cheques, and promissory notes in the United Kingdom. It defines a bill of exchange as an unconditional order in writing, signed by the drawer, requiring the drawee to pay a fixed sum on demand or at a determinable future time (s.3), and sets out the rules on acceptance, negotiation, and the protected position of a holder in due course, who can take the instrument free of defects in title (s.29). A cheque is treated as a bill of exchange drawn on a banker payable on demand (s.73), and a promissory note as a written promise to pay (s.83). Although cheque use has declined sharply, the Act continues to govern negotiable instruments and was updated to permit the electronic presentment of cheques.

Key Points

• Defines a bill of exchange as an unconditional order in writing to pay a fixed sum (s.3)
• Acceptance — the drawee's signified assent to the drawer's order (s.17)
• Holder in due course takes the bill free of defects in title (s.29)
• Cheque defined as a bill of exchange drawn on a banker payable on demand (s.73)
• Promissory note defined as a written promise to pay (s.83)
• Liability of the drawer, acceptor, and indorser, and negotiation by delivery (bearer) or indorsement and delivery (order)

Parts & Sections

Amendments History