Summary CLA2602 SUMMARIZED NOTES 2021.

CLA2602 SUMMARIZED NOTES 2021. CLA2602 - Commercial Law. Non-essential elements of a cheque – elements that appear on a cheque but do not affect the validity of the cheque :  date – cheque not invalid merely because it is not dated. If dated then that is deemed to be the true date of the drawing. If not dated then date of issue of the cheque is regarded as the date of the cheque (issue = date of delivery of the fully completed cheque to a person who takes it as holder). Act says that interest runs from the date of issue of a cheque if the cheque is undated and payable with interest.  place of payment – not invalid if place of payment is not specified – normally though printed cheque states branch of the drawee bank on which cheque is drawn. If branch is shown then the cheque must be presented for payment at the branch of the drawee bank.  stamps – no longer required for validity of a cheque  without recourse / sans recours – stipulates that drawer or indorser of the cheque is limiting his liability to the holder – meaning that drawer or indorser cannot be held liable if cheque is dishonored. e.g. would say "pay person or order without recourse to me". e.g. of cheque with all the non-essential elements filled in Fictitious payees Downloaded by: mayaward | Distribution of this document is illegal Downloaded by: studyengine | Distribution of this document is illegal S - The Marketplace to Buy and Sell your Study Material S - The study-notes marketplace CTM Tutoring If payee of an order cheque is a fictitious person then cheque can be treated as a bearer cheque but note :  intention of drawer is NB in determining whether an order cheque can be treated as a bearer instrument.  If drawer had the intention of making payment to the payee whether fictitious or not then cheque remains an order cheque  If drawer did not intend that payment be made to the payee then order cheque is treated as a bearer instrument  If order cheque is treated as a bearer cheque then no valid signature is necessary and person who receives cheque can become the holder of it (person who is in possession of a bearer cheque). Downloaded by: mayaward | Distribution of this document is illegal Downloaded by: studyengine | Distribution of this document is illegal S - The Marketplace to Buy and Sell your Study Material S - The study-notes marketplace CTM Tutoring STUDY UNIT 3A HOLDER OF A CHEQUE CAN CLAIM PAYMENT OF THAT CHEQUE Holder of a cheque can claim payment of that cheque Holder is person who can claim payment on the cheque - i.e. PAYEE OR INDORSEE IN POSSESSION OF AN ORDER CHEQUE OR THE PERSON IN POSSESSION OF A BEARER CHEQUE, therefore NB to determining if the cheque is an order or bearer cheque before knowing if a person in possession of cheque is the holder. To qualify as holder of an order cheque, therefore have to be either the payee who is in possession of the cheque or the indorsee who is in possession of the cheque. To qualify as holder of a bearer cheque is simply anyone who is in possession of it – i.e. person 'bearing' (carrying) the cheque. Cannot be holder of bearer cheque if you don't have it in your possession. Important to know if person qualifies as the holder of the cheque because :  discharge (payment) of the cheque can only be made to the holder of the cheque  holder of the cheque doesn't have to be the lawful owner of a cheque i.e. thief can be holder of a cheque  holder of bearer cheque can be non-owner of cheque e.g. agent who receives cheque on behalf of his principal  holder MUST have possession of the cheque, therefore if someone not in possession of the cheque can't be the holder BUT just being in possession of the cheque doesn't mean qualifies as holder of an order cheque  holder of cheque is simply neutral concept, therefore being holder doesn't mean being owner or creditor of cheque – only gives holder power to sue on the cheque BUT doesn't imply that person in procession is has the rights of holder of cheque  cannot have more then one holder of a cheque at a time, BUT during "life" of cheque can have number of different holders. Note : definition of holder doesn't state that the possession of the cheque has to be lawful – even thief of bearer cheque can become the holder as is therefore the bearer and thus also the holder, BUT such person will not be able to claim on the cheque cos it wasn't delivered to him. Rights of the holder :  holder may sue on the cheque in his own name  holder can present cheque for payment