CLA2602 SUMMARIZED NOTES

STUDY UNIT 1A NEGOTIABLE INSTRUMENTS & OTHER METHODS OF PAYMENT Negotiable instruments & other methods of payment e.g. bills of exchange, cheques and promissory notes. Sources of SA Law of negotiable instruments :  Legislation – Bills of Exchange Act 34 of 1964  SA Common Law – Roman-Dutch Law (anything not covering in the Bills of Exchange Act is subject to common law)  Decisions of the SA courts  SA courts NOT bound by English case law BUT decisions in English courts can have persuasive value in SA court  Canadian, Australian and New Zealand cases also have persuasive value in SA court BUT not binding force  If no legislation or case law then relationship between parties governed by express or implied terms of the agreement.  Trade usage can also be used – e.g. in operating a cheque account then that is trade usage (i.e. term that is implied by law in a contract so therefore naturalia / naturale). Trade usage as a contractual term must be :  term must be universally and uniformly used within that particular trade  must be notorious  must be reasonable  must be certain  must not conflict with positive law (i.e. legislation or case law)  must not conflict with clear provision of the parties' contract NOT ALL negotiable instruments are instruments of payment – e.g. share warrants and certain bearer debentures (long term bond with fixed interest and normally not secured) are NOT instruments of payment. Not all instruments of payment are negotiable instruments – e.g. travelers' cheques NOT negotiable instrument. Negotiable instruments which are instruments of payment = bill of exchange, cheques & promissory notes. Only these governed by the Bills Of Exchange Act 34 of 1964 not other methods of payment (e.g. stop or debit orders)