Bills of Exchange Act

This Act may be cited as the Bills of Exchange Act.

This section provides definitions of terms used in the Act.

A bill accepted or endorsed when overdue is deemed a bill payable on demand.

A bill payable at a future time may be payable at a fixed period after date or sight, or after the occurrence of a specified event certain to happen; an instrument payable on contingency is not a bill and that defect is not cured by the event happening.

Addresses a situation where the holder, acting in good faith and by mistake, inserts a wrong date in a bill payable after date.

If a bill or acceptance of an endorsement on a bill carries a date, that date is taken as the true date of drawing, acceptance or endorsement unless proven otherwise; and a bill is not invalid solely because it is ante-dated, post-dated, or dated on a Sunday.

Add three days (called days of grace) to the time of payment fixed by a bill unless the bill provides otherwise; the bill is payable on the last day of grace, but if that day is a non-business day payment is due on the next succeeding business day.

Drawers and endorsers may insert a 'referee in case of need' to whom the holder may resort if the bill is dishonoured; the holder may choose whether to resort to that referee.

Drawers or endorsers may include stipulations negating or limiting their own liability to the holder.

Acceptance of a bill is the drawee signifying assent to the drawer's order; acceptance must be written on the bill and signed by the drawee (mere signature without additional words is sufficient).

If a bill payable after sight is initially dishonoured by non-acceptance but later accepted by the drawee, the holder is entitled, unless there is a different agreement, to have the bill accepted as of the date of first presentment for acceptance.

Defines 'general' and 'qualified' acceptances and lists types of qualified acceptances: conditional, partial, local, qualified as to time, and acceptance by some but not all drawees.

If a bill is completed and negotiated to a holder in due course, that holder may enforce it as if it had been properly filled within a reasonable time and authority.

Contracts on a bill remain incomplete and revocable until the instrument is delivered; certain acceptances become complete and irrevocable on notice; delivery by prior parties is presumed for a holder in due course; delivery by a signer is presumed absent contrary proof.

Corporations cannot make themselves liable as drawer, acceptor or endorser of a bill unless they are competent under corporate law; if a bill is drawn or endorsed by someone lacking capacity, the holder is entitled to payment and to enforce it against others.

If a person signs a bill in a trade or assumed name, they are liable on it as if they had signed in their own name.

A forged or unauthorized signature on a bill is inoperative and no party can acquire rights (to retain, discharge, or enforce payment) through that signature, except where the opponent is precluded from raising the forgery or where an unauthorized but not forged signature is ratified.

A procuration signature notifies that the agent has limited signing authority; the principal is bound by the signature only if the agent acted within the agent's actual authority.

A person who signs a bill as drawer, endorser or acceptor and adds words showing they sign for a principal or in a representative capacity is not personally liable on the bill, but merely adding words that describe them as an agent does not by itself exempt them from personal liability.

Section 27 defines what counts as 'value' for a bill of exchange and when a holder is deemed to be a holder for value.

Defines "accommodation party" and states that an accommodation party is liable on the bill to a holder for value regardless of the holder's knowledge.

Section 29 explains when a negotiator's title is defective and states that a holder who derives title through a holder in due course (and is not party to fraud or illegality) has all the rights of that holder in due course.

Defines a bill of exchange as an unconditional written order, signed and addressed by one person to another, requiring payment of a sum certain in money on demand or at a fixed or determinable future time to a specified person, order, or bearer.

Section 30 creates two legal presumptions: (1) a person who signs a bill is presumed to have become a party to it for value; (2) a holder of a bill is presumed to be a holder in due course, subject to conditions shifting the burden of proof if fraud, duress, force, fear or illegality is shown unless the holder proves subsequent good-faith value.

Defines when a bill is negotiated and how different types of bills are negotiated; states effects of a transfer without endorsement and permits representative endorsers to avoid personal liability.

An endorser must write an endorsement on the bill itself and sign it; a simple signature on the bill is sufficient.

The payer may disregard a conditional endorsement; payment to the endorsee is valid whether the condition has been fulfilled or not.

Defines 'endorsement in blank' (no endorsee; bill payable to bearer) and 'special endorsement' (names the person or their order to be paid). States that rules about a payee apply, with modifications, to an endorsee under a special endorsement, and that any holder of a bill endorsed in blank may convert it into a special endorsement by writing a direction above the endorsee’s signature.

A 'restrictive endorsement' is an endorsement that prohibits further negotiation or limits transfer; it gives the endorsee the right to payment and to sue but not to transfer rights unless expressly authorized; if further transfer is authorized, subsequent endorsees take the same rights and liabilities.

An overdue bill negotiated remains subject to any defect of title at maturity, and a person who later takes it cannot acquire a better title than the person from whom they took it.

If a bill is negotiated back to the drawer, a prior endorser, or the acceptor, that party may reissue and further negotiate the bill but may not enforce payment against an intervening party to whom they were previously liable.

Section 38: Rights of the holder

Presentment for acceptance is necessary to fix the maturity of a bill payable after sight.

Defines inland and foreign bills; allows the holder to treat a bill as inland unless the contrary appears; defines "East Africa" as Kenya, Uganda, Tanzania and other Community members under Article 3.

When a bill payable after sight is negotiated, the holder must present it for acceptance or negotiate it within a reasonable time, subject to the Act.

Holders must present bills for acceptance to the drawee (or an authorized person) at a reasonable hour on a business day before the bill is overdue; limited exceptions and specific alternative presentments are provided.

If a bill presented for acceptance is not accepted within the customary time, the person presenting it must treat it as dishonoured; if they do not, the holder loses the right of recourse against the drawer and endorsers.

If a bill is dishonoured by non-acceptance the holder immediately has recourse against the drawer and endorsers and need not make presentment for payment.

Holders of bills may refuse qualified acceptances and may treat bills as dishonoured if they do not obtain an unqualified acceptance; if a qualified acceptance is taken without authorization or subsequent assent by the drawer or endorser, that drawer or endorser is discharged from liability (with exceptions for partial acceptances and foreign bills); and a drawer or endorser who receives notice of a qualified acceptance and does not timely dissent is deemed to have assented.

Bills must be duly presented for payment by the holder (or authorized person) within specified times and at proper places; failure to present discharges the drawer and endorsers; bankers may present at clearing houses and electronically where permitted.

Section 46. Excuses for delay or non-presentment for payment

When a bill is dishonoured by non-payment, the holder immediately has a right of recourse against the drawer and endorsers.

If notice of dishonour is not given after a bill is dishonoured by non-acceptance, the rights of a holder in due course are not prejudiced by that omission.

Notice of dishonour must be given by or on behalf of the holder, or by or on behalf of an endorser who is liable on the bill.

If the drawer and drawee are the same person, or the drawee is fictitious or lacks capacity, the holder may treat the instrument either as a bill of exchange or as a promissory note.

If delay in giving notice of dishonour is caused by circumstances beyond the control of the party giving notice and not due to their default, misconduct or negligence, the party must give notice with reasonable diligence once the cause of delay ends.

Holders may note or protest dishonoured inland bills if they think fit; holders may cause protest for security when the acceptor becomes bankrupt, insolvent or suspends payment.

Holders who present a bill must show it to the person they demand payment from, and when the bill is paid they must immediately give the bill to the payer; presentment is not required to make an acceptor liable and protest or notice of dishonour is not necessary to render the acceptor liable.

A bill does not by itself assign funds in the drawee's hands, and a drawee who does not accept as required by this Act is not liable on the instrument.

The acceptor must pay the bill according to the tenor of his acceptance.

Drawers or endorsers must accept and pay bills on due presentment and must compensate holders or endorsers compelled to pay when the bill is dishonoured, provided the requisite dishonour proceedings are taken; they are precluded from denying payee existence, endorsement capacity, signature genuineness, prior endorsements, validity of the bill at endorsement, and good title.

A person who signs a bill other than as drawer or acceptor incurs the liabilities of an endorser to a holder in due course.

Measure of damages against parties to a dishonoured bill: the amount of the bill.

Defines 'transferor by delivery'; such a transferor is not liable on the instrument; where such a transferor negotiates a bill he warrants to his immediate transferee (a holder for value) three matters about the bill.

A bill is discharged when it is paid in due course; "payment in due course" is payment made at or after maturity to the holder in good faith without notice that the holder's title is defective.

The drawee must be named or otherwise indicated in a bill with reasonable certainty; a bill may be addressed to two or more drawees, but certain orders addressed to multiple drawees are not bills of exchange.

A banker who pays a demand bill in good faith and in the ordinary course of business is not required to prove the genuineness of endorsements and is treated as having paid in due course even if an endorsement is forged; certain drafts or orders purporting to be endorsed authorize the banker to pay the bearer and similarly relieve the banker of the burden of proving endorsement authenticity.

If the acceptor of a bill is or becomes the holder of it at or after its maturity in his own right, the bill is discharged.

If the holder of a bill absolutely and unconditionally renounces his rights against the acceptor at or after maturity, the bill is discharged; the renunciation must be in writing unless the bill is delivered up to the acceptor; the holder may renounce liabilities of any party before, at, or after maturity, but this does not affect the rights of a holder in due course without notice of the renunciation.

If the holder or the holder's agent intentionally cancels a bill (and the cancellation is apparent), the bill is discharged; intentional cancellation of a party's signature by the holder discharges that party and certain endorsers; unintentional or unauthorized cancellations are inoperative and the alleging party bears the burden of proof.

A bill materially altered without the assent of all parties liable is avoided, except against a party who made or assented to the alteration and subsequent endorsers; but a holder in due course may treat an unapparent alteration as if not made and enforce payment.

Anyone not already liable may, with the holder's consent, intervene and accept a protested bill for honour; the acceptance must be written on the bill and signed by the acceptor.

An acceptor for honour must pay the bill on due presentment if the drawee does not pay, provided the bill has been duly presented, protested for non-payment, and the acceptor receives notice of these facts.

If a bill is dishonoured by the acceptor for honour, the acceptor for honour must protest it for non-payment.

Any person may intervene and pay a protested bill supra protest for the honour of a party or for whose account it is drawn; the payer for honour acquires the holder's rights and duties and is entitled to receive the bill and protest on payment.

A person who was the holder of a bill that has been lost may apply to the drawer for another bill of the same tenor (providing security if required); if the drawer refuses on request he may be compelled to give a duplicate.

If a bill is not payable to bearer, the payee must be named or otherwise indicated with reasonable certainty.

Section 70. Action on lost bill

Rules for bills drawn in sets: parts constitute one bill; endorsers and drawee/acceptor can be liable on parts under specified conditions; priority among holders is based on first-accruing title with a qualification for those who accept or pay.

A bill issued outside Kenya is not invalid solely because it is not stamped according to the law of the place of issue.

A bill that contains words prohibiting transfer is valid between the parties but is not negotiable; negotiable bills may be payable to order or to bearer; a bill is payable to bearer if it is expressed so or its only or last endorsement is in blank; a bill is payable to order if so expressed or payable to a particular person and contains no words prohibiting transfer; where a bill is expressed payable to the order of a specified person and not to him or his order, it is nevertheless payable to him or his order at his option.

Section 9 specifies how the sum payable on a bill of exchange is determined: (1) may be payable with interest; by stated instalments (with default causing whole to become due in one variant); or according to an indicated or directed rate of exchange; (2) where words and figures differ, the words prevail; (3) interest (if payable) runs from the date of the bill or, if undated, from issue.

A cheque is defined as a bill of exchange drawn on a banker payable on demand.

If a cheque is not presented within a reasonable time and the drawer (or account holder) had the right to have it paid and suffers actual damage from the delay, that person is discharged to the extent of the damage.

Banks may present cheques for payment by electronically transmitting an image and payment information; where electronic presentment is used, the presenting banker and the drawee banker have the same duties as for physical presentment; the image must include front and back views and electronic payment information is as prescribed by the Central Bank.

If an image return document is lost before its presentment period expires, the holder may apply to the cheque's drawer to provide another cheque of the same amount.

The Central Bank may make regulations relating to cheque truncation.

Section title: Revocation of banker’s authority.

Defines 'general crossing' (parallel transverse lines, optionally with words such as "and company" or "not negotiable") and 'special crossing' (addition of a banker's name, optionally with "not negotiable").

The section permits drawers, holders and bankers to cross cheques (generally or specially), allows holders to add "not negotiable", and permits bankers receiving cheques for collection to cross them specially.

A crossing authorized by this Act is part of the cheque; no person shall obliterate, add to, or alter the crossing except as authorized by this Act.

A banker on whom a cheque is drawn must refuse payment of a cheque crossed specially to more than one banker (except when crossed to an agent for collection who is a banker); if such a banker nonetheless pays a crossed cheque in certain ways he is liable to the true owner for loss; however, a banker who pays in good faith and without negligence where the crossing is not apparent, obliterated, or improperly altered is not liable.

If a banker in good faith and without negligence pays a crossed cheque (generally to a banker or specially to the banker to whom it is crossed or his agent who is a banker), the banker — and if the payee has it, the drawer — is entitled to the same rights as if payment had been made to the true owner.

A person who takes a crossed cheque marked "not negotiable" cannot obtain or give a better title to the cheque than the person they took it from.

A crossed cheque marked "account payee" or "a/c payee" (with or without the word "only") is not transferable and is valid only between the parties to the cheque.

Provisions about the crossing of cheques apply to prescribed instruments (not being cheques) in the same way as they apply to cheques.

Section 83 has been repealed.

Defines a promissory note as an unconditional written promise signed by the maker to pay a sum certain on demand or at a fixed or determinable future time to a specified person or bearer.

A promissory note is not complete until it has been delivered to the payee or the bearer.

A promissory note may be made by two or more makers; those makers may be liable on it jointly or jointly and severally according to its tenor; a note reading "I promise to pay" signed by two or more persons is deemed to be their joint and several note.

If a note payable on demand is negotiated, the holder is not treated as overdue for purposes of being affected by defects of title of which he had no notice, merely because a reasonable time for presenting it has elapsed since issue.

If a promissory note names a particular place of payment, the maker must be presented with the note at that place to be liable; presentment is not otherwise required for maker liability. Presentment is necessary to render an endorser liable; where a place is named (or indicated by memorandum) presentment at that place suffices, and a presentment to the maker elsewhere may also suffice if otherwise sufficient.

The maker is obligated to pay the note according to its tenor.

Provisions governing bills of exchange apply, with necessary modifications, to promissory notes.

An action is treated as done in good faith if it was actually done honestly, even if it was negligent.

Section 92 permits a person required to sign an instrument to have another person sign on his authority, allows corporations to seal instruments instead of signing, and states that corporate bills or notes need not be under seal.

If the time allowed for doing something under the Act is less than three days, non-business days are excluded when counting time; non-business days listed include Sunday, a public holiday, and a bank holiday declared under section 46 of the Banking Act (Cap. 488); for a foreign bill a Saturday is excluded; other days are business days.

Noting a bill for protest before the deadline suffices; the formal protest can be extended to the date of the noting.

If a dishonoured bill must be protested but a notary is not available at that place, any householder or substantial resident may, in the presence of two witnesses, give a signed certificate attesting the dishonour; that certificate has the effect of a formal protest.

Dividend warrants may be crossed.

Rules relating to bills of exchange, promissory notes, and cheques continue to apply despite this Act.