Presentment, Payment and Discharge: Complete Notes (Part F)

Part F follows an instrument to the end of its life: presentment for acceptance and for payment, payment in due course, and the ways in which the instrument and its parties are discharged. This consolidated note covers Topics 25 to 28.

25. Presentment for Acceptance and Sight

A bill payable after sight must be presented to the drawee for acceptance, and a note payable after sight to the maker for sight, within a reasonable time, in business hours on a business day, unless the instrument fixes a time or place; otherwise no party is liable to the defaulting holder (Sections 61 and 62). If the drawee cannot be found after reasonable search, the bill is dishonoured; registered post suffices where agreed or customary. The drawee may require 48 hours to decide (Section 63), but allowing more discharges non-consenting prior parties (Section 83).

26. Presentment for Payment

• Duty (Section 64): present to the maker, acceptor or drawee, or else the other parties are discharged; no presentment is needed to charge the maker of a demand note with no place of payment. A drawee bank may call for the paper behind a truncated cheque if it suspects fraud.
• When (Sections 65 to 67, 74): business or banking hours; time instruments at maturity; instalments on the third day after each falls due; demand instruments within a reasonable time.
• Where (Sections 68 to 71): at the specified place ("and not elsewhere" binds all parties), else the place of business or residence, or in person.
• Cheques (Sections 72 and 73): before the drawer's position with the bank changes to his prejudice; within a reasonable time to charge indorsers.
• Excuses (Sections 75A and 76): delay beyond the holder's control; prevention or absence of the payer; engagement to pay regardless; waiver after maturity; no possible damage to the drawer.

27. Payment in Due Course

Payment in due course is payment according to the apparent tenor, in good faith and without negligence, to a person in possession, with no reasonable ground to doubt his entitlement (Section 10); payment before maturity does not qualify. Payment must be made to the holder to discharge the maker or acceptor (Section 78), but payment in due course of a bearer or blank-indorsed instrument discharges the payer against all parties (Section 82(c)). The payer may require the instrument to be shown and delivered up, or an indemnity if lost; for truncated cheques the paying bank's certificate is prima facie proof of payment (Section 81).

28. Discharge and Material Alteration

• Section 82: discharge by intentional cancellation, release, and payment in due course of bearer instruments.
• Holder's conduct: extra time for acceptance (Section 83), delay in presenting a cheque causing damage (Section 84), qualified acceptance (Section 86), non-presentment, want of notice, and suretyship rules (Sections 39 and 40).
• Material alteration (Sections 87 to 89): an unauthorised change in legal effect makes the instrument void against non-consenting parties, even for a holder in due course; later acceptors and indorsers are bound; payment of an instrument whose alteration is not apparent discharges the payer. Authorised completion, conversion of blank indorsements and crossing are not alterations.
• Section 90: rights are extinguished when the acceptor holds the bill in his own right at or after maturity.

29. The Topics of This Part

Topic 25: presentment for acceptance and sight (Sections 61 to 63); Topic 26: presentment for payment (Sections 64 to 76 and 75A); Topic 27: payment in due course (Sections 10, 78 and 81); Topic 28: discharge and material alteration (Sections 82 to 90).