Guide to Business Law 5e by Kopel

Author:Kopel [SHAWN KOPEL]
Format: epub
ISBN: 9780199057078
Publisher: Oxford University Press Southern Africa (Pty) Ltd.
Published: 2013-03-14T16:00:00+00:00

Bank of England v Vagliano Brothers14

The court held that one must look at the intention of the drawer to establish whether the payee was fictitious or not. If the drawer had no intention to pay the payee, then the payee was fictitious, whether the payee named in the bill existed or not. The instrument was therefore a bearer instrument.

A cheque marked ‘Pay cash only’ is not valid because there is no person called ‘cash’. However, a cheque marked ‘Pay cash or bearer’ is valid because the cheque is then a bearer instrument. The effect of cheques drawn to ‘cash only’ or to ‘order only’ is that these cheques are not valid bills of exchange because they do not specify a person to whose order the cheque is payable. These cheques are normally not paid or ‘dishonoured’ by bankers and returned with the answer ‘irregularly drawn’. The drawer should be requested to alter the cheque so that it is payable to ‘bearer’.

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