Words: 1981
Am to advise Dry. Duck in regards to the application of the Cheeses Act 1986 (Act) (The Act) in relation to the cheeses he has written. The particular issues are with post-dating of the queue for $90,000 drawn in favor of Ken Brome, the validity of the unsigned, undated queue, and whether the delay of Kea Medical Furniture presenting the check drawn in favor of them affects payment. The queue for $90,000 drawn in favor of Ken Brome The issues with this queue was that the queue for $90,000 drawn by Dry Duck was delivered to Ken Brome, on the 9th of January 2012, even though it was greed to by both parties to be banked on the 30th of January 2012. However, despite this agreement, Mr.. Brome deposited the queue on the 15th of January 2012. To determine whether this queue is valid, it must be examined whether or not the complies with the definition of a queue in SIS(I) . Then effect of depositing a post-dated queue must also be examined under The Act, to determine its validity. . 1 Is it a queue? S 10(2) uses clear language that expresses the parliament’s intention that any instrument which doesn’t comply with s 10(1) is not a queue under The Act . Therefore the instrument must comply with all the criteria under sis(1). According to sol(1)(a), the queue must be an unconditional order in writing that is addressed by a person to another person, being a financial institution . This is clear on the facts; the queue is being written by Dry Duck drawn on SST. George Bank (the financial institution) to Ken.
The next requirement (sis(1)(b)) is that the queue is signed by the person giving it . This is also clear on the facts. The last requirement (sis(1)(c)) is that the queue requires the financial institution to pay on demand a sum certain in none . SSL 6(2)(b) states that a queue is not invalid if it is antedated or post- dated (in this case, it was post-dated). SIS(3) of The Act also states that the fact an instrument is post-dated will be disregarded, for the purposes of determining whether or not an instrument is a queue.
The Act defines that ‘order to pay a sum certain’ must be a sum specified with reasonable certainty s 15 . The order of $90,000 to be paid to Ken Brome is a sum specified with reasonable certainty. Therefore, according to the facts, the instrument meets all the requirements in he definition of a queue under s 10(1) . 1. 2 Was payment of the queue valid? The fact the queue was presented on the 17th of January 201 2, when it was dated on the 30th of January 2012 may affect payment of the queue. As discussed above, post-dating does not affect whether or not the instrument is a queue.
SIS(1) of The Act instructs that a drawer institution must either pay or dishonor a duly presented queue as soon as reasonably practical. SIS(2) defines that a queue is not considered ‘duly presented’ when demand for payment of a queue is made ‘before the date of the queue arrives’. The statute therefore stipulates that demand to pay a post-dated queue does not give rise for the drawer institution (SST. George Bank) to pay Ken Brome, as it has not been duly presented. However, the queue has already been paid out to Ken Brome on the 17th of January 2012.
No provisions of The Act seem to deal with cheeses erroneously paid before what was dated. The Act only provides clear instructions for such issues as dishonored cheeses , where there has been an unauthorized signature , and lost or destroyed cheeses . The Act stipulates the drawer institution doesn’t have an obligation to pay or dishonor a queue, however does not state payment of a post-dated queue is invalid or that the drawer, drawer institution or payee should be penalized. Therefore the payment may have been valid, or perhaps should have been withheld until the 30th of January 2012.
It is assumed payment was valid. 1. 3 Effect of ‘not negotiable’ The crossing of a queue affects how payment of the queue is made. Where there the words ‘not negotiable’ are written between two parallel transverse lines on the front of the queue, the queue is considered crossed (sis(1)(b)) . It is assumed the marking of ‘not negotiable’ was written at least substantially between the two lines. The effect of crossing a queue is the drawer institution must pay the queue to a financial institution (sis This means payment can only be made to a bank account, and not in cash.
Under sis , no one else has better title to the queue than the first-mentioned person who took the queue had on a queue crossed ‘not negotiable’. Ken Brome is the only mentioned person who took the queue, and therefore payment should be made to his account, if payment of the queue is valid spite the fact it is post-dated. 2 The queue for $25,000 drawn in favor of Ken Brome 2. 1 Is it a queue? The requirements of a queue are stipulated in SSL 0(1) , and all requirements must be fulfilled to be a queue (sis(2) ), as discussed above.
The issue with the queue is it was not signed by the person giving the queue, being Dry Duck, which is required under sol(1)(b) . However, on the facts, all other elements are satisfied. The instrument is therefore not a queue under The Act, as all elements of SSL 0(1) must be satisfied according to s 10(2) . Therefore it is likely no payment hall be made on this queue, as Dry Duck has not signed it. However if the queue is valid, it must be determined whether or not Ken Brome assigning and signing the queue to Jim Fraser has any effect on its payment. 2. Assignment of the queue to Jim Fraser Ken Brome assigned the queue to Jim Fraser by writing the words “Please pay Jim Fraser this Queue” and signing “K. Brome” on the queue. The queue was originally drawn in favor of Ken Brome, and was crossed “not negotiable”. It is assumed the queue was crossed correctly according to sis(1 )(b) . This may have n impact on whether title of the queue can be transferred to Jim Fraser. SIS(1) of The Act provides that every queue is transferable by negotiation until discharged, and specifically by sis(3) that a crossed queue does not effect transferability by negotiation.
Therefore the fact the queue has been crossed does not have an impact on its transferability to Jim Fraser. A queue payable to order is transferred by negotiation if it meets the criteria in sis(2) . It must be endorsed by the holder (sis(2)(a) ). SIS instructs that a ‘mere signature’ is sufficient for an endorsement. On the facts, Ken Brome, the holder has endorsed the queue as he has signed it. The second requirement for a queue transferred by negotiation is ; the queue is delivered so as to complete the contract arising out of the endorsement.
There is a presumption of effective delivery of the queue in sis(2) (a)(i) of the Act. Fifth queue is a valid queue under The Act (discussed in 2. 1), it is likely the queue has been transferred by negotiation to Jim Fraser. 2. 3 Refusal of payment to Jim Fraser by National Australia Bank (NAB) provides that the authority of the drawer institution to pay a queue is ruminated by a countermand of payment. Dry Duck ordered for the payment of the queue for $25,000 to be stopped on the 17th of January 2012. Therefore, NAB’s refusal to cash the queue to Jim Fraser on the 18th of January, had legal basis under 2. Any liability of Ken Brome on the queue Liability of endorsers is described in sis. The section states an endorser undertakes that on due presentment for payment, the queue will be paid as endorsed (sis(a) ), and if payment is dispensed and the queue is unpaid after its date has arrived (sis(b)(ii) , the endorser will compensate the holder. The section is subject to sis(b)(i)(a) which states presentment of the queue is dispensed with, as regards to the drawer, when the drawer institution is not obliged to pay the queue. As discussed in part 2. 1, SST.
George bank does not have an obligation to pay the queue as it is not a queue under The Act. The queue is therefore is considered dispensed. Therefore, as the queue is dispensed, it is likely Ken Brome, as the endorser, will be liable to Jim Fraser for payment of the queue. 3 The queue for $91 , 212 drawn in favor of Kea Medical Furniture (MIFF) The main issues with this queue are the delayed resentment for payment by MIFF and the fact Dry Duck countermanded the payment on the 13th of March 2012. However, it must first be determined whether the instrument is a queue under The Act. . 1 Is it a queue? Dry Duck drew a queue to MIFF on the 1 lath of November 2011. As discussed earlier, the all requirements under sol(1) must be fulfilled for an instrument to be a queue (sol(2) ). It is presumed all the requirements of SIS(I) are met. However, as the queue was not banked until the 28th of April 2013, this may affect payment of the queue under The Act. 3. 2 Effect of delayed presentment f the queue A drawer institution must either pay or dishonor a duly presented queue as soon as reasonably practical, according to SIS(1) .
Under sis(1)(a) , a drawer is not liable on the queue where it is not duly presented within a ‘reasonable time’. To determine a ‘reasonable time’ sis(3) specifies that: (a) the fact the instrument is a queue means it is reasonable to expect presentment for payment to be prompt; (b) usage in relation to presentment and (c) particular facts of the case. The queue was not presented by MIFF until five months after it was delivered. Presentment of the queue by MIFF is not likely to be considered ‘prompt’.
The facts of the case taken into consideration under sis(3)(c) include whether delays were caused by circumstance beyond the control of the holder (sis(3)(c)(ii) , and not imputable to holder’s default, misconduct or negligence. According to the facts, the delay by MIFF was caused by an administrative error. This is most likely considered a ‘default’ on the part of the holder. Therefore, on the facts, the queue was not duly presented within a reasonable time. Applying sis(1)(a), it is keel the drawer, Dry Duck is not liable on the queue. . Ass SST. George Bank obliged to pay the queue? Dry Duck specifically asked to be advised if SST. George Bank is obliged to pay the queue, and the effect if he didn’t countermand payment on the 13th of March 2012. It is already established Dry Duck is not liable on the amount of the queue. Therefore, SST. George Bank would not have to pay the queue regardless of the phonically. However, if the delayed presentment didn’t have an effect on Dry Duck’s liability, his countermand of the payment of the queue on the 13th of
March terminates the drawer institution’s authority to pay the queue under sis(1)(a) . SST. George Bank have no obligation to pay the queue in favor of MIFF. 4 Conclusion On the facts, with the application of The Cheeses Act 1986 (Act), it is likely the queue of $90,000 written in favor of Ken Brome is valid. It does not seem likely the queue for $25,000 will be paid, due to the lack of signature from Dry Duck and the fact it was countermanded. The queue to MIFF is not likely to be paid as well, as it was not duly presented within a reasonable time and was also countermanded.