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

Marginal note:Requisites

• 39 (1) As between immediate parties and as regards a remote party, other than a holder in due course, the delivery of a bill

  • (a) in order to be effectual must be made either by or under the authority of the party drawing, accepting or endorsing, as the case may be; or

  • (b) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill.

• Marginal note:Presumption

  (2) Where the bill is in the hands of a holder in due course, a valid delivery of the bill by all parties prior to him, so as to make them liable to him, is conclusively presumed.

Marginal note:Parting with possession

40 Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor or endorser, a valid and unconditional delivery by him is presumed until the contrary is proved.

Computation of Time, Non-juridical Days and Days of Grace

Marginal note:Computation of time

41 Where a bill is not payable on demand, three days, called days of grace, are, in every case, where the bill itself does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace, but whenever the last day of grace falls on a legal holiday or non-juridical day in the province where any such bill is payable, the day next following, not being a legal holiday or non-juridical day in that province, is the last day of grace.

Marginal note:Non-juridical days

42 In all matters relating to bills of exchange, the following and no other days shall be observed as legal holidays or non-juridical days:

• (a) in all the provinces,

  • (i) Sundays, New Year’s Day, Good Friday, Victoria Day, Canada Day, Labour Day, National Day for Truth and Reconciliation, which is observed on September 30, Remembrance Day and Christmas Day,

  • (ii) the birthday (or the day fixed by proclamation for the celebration of the birthday) of the reigning Sovereign,

  • (iii) any day appointed by proclamation to be observed as a public holiday, or as a day of general prayer or mourning or day of public rejoicing or thanksgiving, throughout Canada, and

  • (iv) the day next following New Year’s Day, Christmas Day and the birthday of the reigning Sovereign (if no other day is fixed by proclamation for the celebration of the birthday) when those days respectively fall on a Sunday;

• (b) in any province, any day appointed by proclamation of the lieutenant governor of the province to be observed as a public holiday, or for a fast or thanksgiving within the province, and any day that is a non-juridical day by virtue of an Act of the legislature of the province; and

• (c) in any city, town, municipality or other organized district, any day appointed to be observed as a civic holiday by resolution of the council, or other authority charged with the administration of the civic or municipal affairs of the city, town, municipality or district.

Marginal note:Time of payment

43 Where a bill is payable at sight, or at a fixed period after date, after sight or after the happening of a specified event, the time of payment is determined by excluding the day from which the time is to begin to run and by including the day of payment.

Marginal note:Sight bill

44 Where a bill is payable at sight or at a fixed period after sight, the time begins to run from the date of the acceptance if the bill is accepted, and from the date of noting or protest if the bill is noted or protested for non-acceptance or for non-delivery.

Marginal note:Due date

• 45 (1) Every bill that is made payable at a month or months after date becomes due on the same numbered day of the month in which it is made payable as the day on which it is dated, unless there is no such day in the month in which it is made payable, in which case it becomes due on the last day of that month, with the addition, in all cases, of the days of grace.

• Marginal note:Definition of “month”

  (2) The term month in a bill means the calendar month.

Capacity and Authority of Parties

Marginal note:Capacity of parties

• 46 (1) Capacity to incur liability as a party to a bill is coextensive with capacity to contract.

• Marginal note:Corporations

  (2) Nothing in this section enables a corporation to make itself liable as drawer, acceptor or endorser of a bill, unless it may do so under the law in force relating to that corporation.

Marginal note:Effect of disability on holder

47 Where a bill is drawn or endorsed by any infant, minor or corporation having no capacity or power to incur liability on a bill, the drawing or endorsement entitles the holder to receive payment of the bill and to enforce it against any other party thereto.

Marginal note:Forgery

• 48 (1) Subject to this Act, where a signature on a bill is forged, or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority.

• Marginal note:Ratification

  (2) Nothing in this section affects the ratification of an unauthorized signature not amounting to a forgery.

• Marginal note:Recovery of amount paid on forged cheque

  (3) Where a cheque payable to order is paid by the drawee on a forged endorsement out of the funds of the drawer, or is so paid and charged to his account, the drawer has no right of action against the drawee for the recovery of the amount so paid, nor any defence to any claim made by the drawee for the amount so paid, as the case may be, unless he gives notice in writing of the forgery to the drawee within one year after he has acquired notice of the forgery.

• Marginal note:Default of notice

  (4) In case of failure by the drawer to give notice of the forgery within the period referred to in subsection (3), the cheque shall be held to have been paid in due course with respect to every other party thereto or named therein, who has not previously instituted proceedings for the protection of his rights.

Marginal note:Recovery of amount paid on forged endorsement

• 49 (1) Where a bill bearing a forged or an unauthorized endorsement is paid in good faith and in the ordinary course of business by or on behalf of the drawee or acceptor, the person by whom or on whose behalf the payment is made has the right to recover the amount paid from the person to whom it was paid or from any endorser who has endorsed the bill subsequent to the forged or unauthorized endorsement if notice of the endorsement being a forged or an unauthorized endorsement is given to each such subsequent endorser within the time and in the manner mentioned in this section.

• Marginal note:Rights against prior endorsers

  (2) Any person or endorser from whom an amount has been recovered under subsection (1) has the like right of recovery against any prior endorser subsequent to the forged or unauthorized endorsement.

• Marginal note:Notice of forgery

  (3) The notice referred to in subsection (1) shall be given within a reasonable time after the person seeking to recover the amount has acquired notice that the endorsement is forged or unauthorized, and may be given in the same manner, and if sent by post may be addressed in the same way as notice of protest or dishonour of a bill may be given or addressed under this Act.

Marginal note:Procuration signatures

50 A signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is bound by such signature only if the agent in so signing was acting within the actual limits of his authority.

Marginal note:Signing in representative capacity

• 51 (1) Where a person signs a bill as drawer, endorser or acceptor and adds words to his signature indicating that he has signed for or on behalf of a principal, or in a representative character, he is not personally liable thereon, but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability.

• Marginal note:Rule for determining capacity

  (2) In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted.

Consideration

Marginal note:Valuable consideration

• 52 (1) Valuable consideration for a bill may be constituted by

  • (a) any consideration sufficient to support a simple contract; or

  • (b) an antecedent debt or liability.

• Marginal note:Form of bill

  (2) An antecedent debt or liability is deemed valuable consideration, whether the bill is payable on demand or at a future time.

Marginal note:Holder for value

• 53 (1) Where value has, at any time, been given for a bill, the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to that time.

• Marginal note:In case of lien

  (2) Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien.

Marginal note:Accommodation bill

• 54 (1) An accommodation party to a bill is a person who has signed a bill as drawer, acceptor or endorser, without receiving value therefor, and for the purpose of lending his name to some other person.

• Marginal note:Liability of party

  (2) An accommodation party is liable on a bill to a holder for value, and it is immaterial whether, when that holder took the bill, he knew that party to be an accommodation party or not.

Holder in Due Course

Marginal note:Holder in due course

• 55 (1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions, namely,

  • (a) that he became the holder of it before it was overdue and without notice that it had been previously dishonoured, if such was the fact; and

  • (b) that he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it.

• Marginal note:Title defective

  (2) In particular, the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud.

Marginal note:Right of subsequent holder

56 A holder, whether for value or not, who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.