ADAM ASSOCIATES (STRATHCLYDE) LIMITED v. CGU INSURANCE PLC [2000] ScotSC 18 (12th July, 2000)

ADAM ASSOCIATES (STRATHCLYDE) LIMITED v. CGU INSURANCE PLC [2000] ScotSC 18 (12th July, 2000)

The cheque payable to 'Adam Associates' was capable of discharging the debt owed to 'Adam Associates (Strathclyde) Limited' because the designation of the payee was sufficiently certain, as evidenced by prior banking practice and acceptance of similar cheques. The pursuers failed to prove otherwise, and the defenders were entitled to rely on the director's fiduciary duty in the absence of contrary knowledge.

Citation
[2000] ScotSC 18
Parties
Pursuer: Adam Associates (Strathclyde) Limited; Defender: CGU Insurance PLC
Jurisdiction
Scotland
Procedural Posture
Civil Appeal / Appeal From Sheriff's Interlocutor
Outcome
appeal refused; sheriff's interlocutor adhered to
Legal Topics
Payment by Cheque, Reasonable Certainty of Payee, Discharge of Debt, Fiduciary Duty, Misappropriation of Funds
Commercial Law Banking Law Insurance Law Payment by Cheque Reasonable Certainty of Payee Discharge of Debt Fiduciary Duty Misappropriation of Funds

Case Brief

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Parties

Adam Associates (Strathclyde) Limited

Pursuer

CGU Insurance PLC

Defender

Procedural Posture

Civil Appeal / Appeal From Sheriff's Interlocutor

Legal Issues

  1. 1 Whether a cheque payable to 'Adam Associates' validly discharged a debt owed to 'Adam Associates (Strathclyde) Limited'
  2. 2 Whether the designation of the payee was sufficiently certain to meet statutory requirements
  3. 3 Whether the defenders facilitated fraud by issuing the cheque in that form

Ratio Decidendi

The cheque payable to 'Adam Associates' was capable of discharging the debt owed to 'Adam Associates (Strathclyde) Limited' because the designation of the payee was sufficiently certain, as evidenced by prior banking practice and acceptance of similar cheques. The pursuers failed to prove otherwise, and the defenders were entitled to rely on the director's fiduciary duty in the absence of contrary knowledge.

Court Disposition

appeal refused; sheriff's interlocutor adhered to

Orders

  • Pursuers and appellants found liable to defenders and respondents in expenses of the appeal
  • Remit to auditor of court to tax and report on expenses