Person

liable on considera

tion.

the note be dishonoured, C. is not liable for the price of the goods, unless he receive notice of dishonour.1

NOTE. It seems from the last cited cases1 that the same strict and technical notice of dishonour is not requisite to charge a person liable on the consideration as is requisite to charge a party liable on the bill. This is fair, for in the one case the liability is transferable, in the other it is not, and therefore all defences between the parties can be inquired into. A distinction might be drawn between persons liable on the consideration who have, and who have not, been holders of the bill."

Duty to give up bill.

Duty to give receipt.

Duties on receiving Payment.

Art. 206. It is the duty of the holder to deliver up the bill when it is paid in due course, by or on behalf of the drawee or acceptor.3 Cf. Art. 165.

Exception 1.-Non-negotiable note.1

Exception 2-The person who was the holder of a bill is (perhaps) entitled to receive payment, without giving it up, on proof of its destruction."

NOTE. Cf. Arts. 140 and 144 as to lost bills, and Arts. 27 and 29 as to the parts of a set. Giving up the bill is a concurrent condition, and not a condition precedent to payment. German Exchange Law, Arts. 38-39, provides that the holder must take part payment if it be offered. In that case he may retain the bill, but must indorse upon it the amount he has received.

Art. 207. The holder of a bill for 21. or upwards is

1 Camidge v. Allenby (1827), 6 B. & C. 373; Turner v. Stones (1843), 1 D. & L. 122; Robson v. Oliver (1847), 10 Q. B. 707, cases on country bank notes; Cf. Art. 225.

2 Cf. Camidge v. Allenby (1827), 6 B. & C. at 381.

3 Hansard v. Robinson (1827), 7 B. & C. at 94; Crowe v. Clay (1854), 9 Exch. 604, Ex. Ch.; German Exchange Law, Art. 39; Cf. Jones v. Broadhurst (1850), 9 C. B. at 182, as to payment by drawer or indorser; and Corner v. Taylor (1854), 10 Exch. 441; Woodward v. Pell (1868), 4 L. R. Q. B. 55, lien for costs.

4 Charnley v. Grundy (1854), 14 C. B. at 614; Cf. Art. 107.

Wright v. Maidstone (1855), 24 L. J. Ch. 623.

give

(perhaps) bound, subject to a penalty of 10l., to give Duty to a receipt on obtaining payment. Such receipt may receipt. be written on the bill, and in that case does not require a stamp.2

NOTE. The doubt is created by the terms of § 123, inasmuch as the receipt on a bill is exempt from duty. The payor clearly cannot refuse to pay because the payce refuses to give a receipt.3

1 Stamp Act, 1870, 33 & 34 Vict. c. 97, §§ 121-123.

2 Stamp Act, 1870, Sched., tit. Receipt.

3 Laing v. Meader (1824), 1 C. & P. 257.

M

CHAPTER VI.

LIABILITIES OF PARTIES.

Duty to accept or pay.

Drawee and Drawer.

Art. 208. The drawee of an unaccepted bill of exchange is not bound to accept or pay it, unless he has for valuable consideration expressly or impliedly agreed so to do. If he has so agreed his relations with the drawer are regulated by the terms of the particular agreement between them.'

Exception.-Cheque on a banker."

NOTE. In some continental countries the duty to accept or pay bills arises from the mere relationship of debtor and creditor in a mercantile transaction; whereas here there must be an agreement founded on consideration. Apart from something special in the contract, it seems that the authority or obligation to accept is not revoked by the death of the drawer,4 while it is by notice of his bankruptcy; for this renders funds in the hands of the drawee no longer available for the payment of the bill, and incapacitates the drawer from fulfilling his part of the contract. The bankruptcy of

1 Chitty, p. 200; Cf. Goodwin v. Robarts (1875), 10 L. R. Ex. at 351, Ex. Ch.; see e.g. Smith v. Brown (1815), 6 Taunt. at 344; Laing v. Barclay (1823), 1 B. & C. 398; Huntley v. Sanderson (1833), 1 Cr. & M. 467 (agent authorised to draw on principal; contract of indemnity); Cumming v. Shand (1860), 29 L. J. Ex. at 132 (implied agreement to let customer overdraw); English Credit Co. v. Arduin (1871), 5 L. R. H. L. 64 (construction of credit).

2 Art. 260; Cf. Goodwin v. Robarts (1875), 10 L. R. Ex. at 351.

3 Pothier, No. 92; Nouguier, § 442; Belgian Code de Commerce, Art. 8. Chitty, p. 193; Story, § 250; Cutts v. Perkins (1815), 12 Massachuss. R. 206; Cf. Billings v. Devaux (1841), 3 M. & Gr. at 574; Att.-Genl. v. Pratt (1874), 9 L. R. Ex. 140.

5 Pothier, No. 96; Cf. Citizens Bank v. New Orleans Bank (1873), 6 L. R. H. L. 352

pay.

the drawee is not per se a breach of contract with the drawer. In Duty to France the engagement between drawer and drawee is held to accept or be a contract of " mandat," and their relations are regulated accordingly. Letter of advice. It is usual, but not necessary, for the drawer to advise the drawee of drafts drawn on him by letter of advice.3

Art. 209. When the drawee breaks his contract Measure of damages with the drawer by dishonouring his draft, the con- against sequences reasonably resulting from the breach of contract constitute the measure of damage.*

ILLUSTRATIONS.

1. A customer having a balance of 2001. at his banker's draws a cheque for 1007., or accepts a bill for 1007. payable at his bankers. If this cheque or bill is dishonoured he may recover substantial damages for the injury to his credit, without proving any actual loss.5

2. A., in a foreign country, draws on B., in England, under a letter of credit. B. dishonours his draft. A. may recover the reexchange and notarial expenses which he has had to pay to the holder, and also the cost of telegrams, etc., consequent on the dishonour.?

NOTE. Although an acceptor, as such, may not be liable for reexchange, it is clear that the drawee by accepting cannot alter or escape from his special contract with the drawer; and this may he the ground of his liability for re-exchange, etc., when sued by the drawer. Cf. Art. 213 n.

1 Re Agra Bank (1867), 5 L. R. Eq. 160.

2 Pothier, No. 91-100; Bravard-Demangeat, 7 ed. 219; Code Civil, Art. 1984-2010.

3 Arnold v. Cheque Bank (1876), 1 L. R. C. P. D. at 586; Nouguier, §§ 271-284.

4 Prehn v. Royal Bank of Liverpool (1870), 5 L. R. Ex. 92; Cf. Ilsley v. Jones (1858), 78 Massachus, R. 260, accommodation bill.

5 Rollin v. Steward (1854), 23 L. J. C. P. 148; Cf. Cumming v. Shand (1860), 29 L. J. Ex. 129; Summers v. City Bank (1874), 9 L. R. C. P. 580.

6 Walker v. Hamilton (1860), 1 De G. F. & J. 602; Re General South American Co. (1877), 7 L. R. Ch. D. 637.

7 Prehn v.

Royal Bank of Liverpool (1870), 5 L. R. Ex. 92.

drawee.

No

privity

Drawee and Holder.

Art. 210. The drawee of a bill, as such, incurs no between liability to the holder, and there is no privity of contract between them.1

drawee and

holder.

ILLUSTRATION.

C. has

A., having 1007. at his banker's, draws a cheque on them for that sum in favour of C. The cheque is dishonoured. no remedy against the bankers. 2

NOTE. Similarly, when a bill is accepted payable at a banker's, there is no privity between the drawer or holder and the acceptor's banker. In France, when the drawee has funds, drawing a bill operates as an assignment of them in favour of the holder, and creates a privity between holder and drawee.4

Explanation.-Such privity may be created by agreement external to the bill, and the relations of the parties are then regulated by the terms of such agreement."

ILLUSTRATIONS.

1. B. gives A. an open letter of credit authorizing him to draw to the extent of 10,000l., and concluding "parties negotiating bills under it are requested to indorse particulars on the back hereof." A. accordingly draws a bill for 5007. in favour of C., who duly indorses the particulars on the credit. B. becomes insolvent, and dishonours the bill on presentment. C. can prove for 500l. against B.'s estate.

2. A. draws a bill on B. in favour of C., and remits funds to meet it. B. does not accept the bill, but he tells C. that he has received the funds and promises to pay the bill. B. does not pay the bill. No action on the bill can be maintained against B., but C. can sue B. for money received to his use."

1 Hopkinson v. Forster (1874), 19 L. R. Eq. 74; Carr v. Nat. Bank (1871), 107 Massachuss. R. 45; Cf. Vaughan v. Halliday (1874), 9 L. R. Ch. 561.

2 Id.; Schroeder v. Central Bank (1876), 34 L. T. N. S. 735.

3 Hill v. Royds (1869), 8 L. R. Eq. 290.

4 Bravard-Demangeat, 7th ed. 235; Nouguier, §§ 392-431.

5 Robey v. Ollier (1872), 7 L. R. Ch. 695; Ranken v. Alfaro (1877), 5 L. R. Ch. D. 786.

6 Re Agra Bank (1867), 2 L. R. Ch. 391; Cf. Citizens Bank v. New Orleans Bank (1873), 6 L. R. H. L. 352.

7 Griffin v. Weatherby (1868), 3 L. R. Q. B. 753.