Once he draws a bill the drawer cannot in due course

• Once he draws a bill, the drawer cannot in due
course deny to a holder the existence of the
payee and his capacity to indorse – s.55(1)(b)
BEA . (see Yee Chow Fah v Multihorizon Sdn
Bhd [1999]).
ismk/BD30803/Topic5 45
(2) The Drawee/Acceptor
• The drawee is the person to whom the bill is
addressed. He is liable only when he signs
the bills as acceptor .
• Acceptance is complete when the bill is
delivered or when the person entitled to the
bill has been notified of the acceptance by the
drawee.
• The acceptor in accepting a bill promises to
pay it according to its tenor – s.54(a) BEA
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(3) The Indorsers
• An indorsement is usually effected by signing
on the back of the bill.
• A person indorses a bill in order to transfer it.
• By indorsing, he promises that the bill when
presented will be paid in accordance to its
tenor and that if it is dishonoured, he will
compensate the holder or any subsequent
indorses who has suffered loss.
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(4) The Accommodation Party
• An accommodation party is a person who
signs a bill as drawer, acceptor or an indorser
without receiving value for it.
• And he does so for the purpose of lending his
name to some other person – s.28(1) BEA.
• S.28(2) states that an accommodation party is
liable on the bill to a holder for value. It does
not matter whether when the holder took the
bill he knew that such party was an
accommodation party or not.
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43 44
45 46
47 48

BD30803/Topic5
9
(5) Fictitious & Non-Existing
Payees
• If the payee of a bill is fictitious or non-existing,
the bill is treated as payable to bearer – s.7(3)
BEA.
• It can be negotiated without the indorsement of
the payee.
**A fictitious payee is one whom the drawer names
as payee but who is not intended by the drawer to
receive payment on the bill. On the other hand, a
non-existing payee is one whose non-existence the
drawer is unaware of and who is genuinely
intended by the drawer to receive payment.
ismk/BD30803/Topic5 49
INDORSEMENT
• S.34(1) – blank indorsement
• S.34(2) – special indorsement
• S.32(a) - the signature of the holder or of his
duly authorised agent is essential to the
validity of indorsement
• S.32(b) – partial indorsement, does not
operate as negotiation of an instrument
• S.32(d) - he may indorse the instrument as
described - he may add, if he thinks fit, his
proper signature
• See Arab Bank Ltd v Ross [1952] Court of
Appeal: the omission of the word company
made the indorsement irregular
ismk/BD30803/Topic5 50
CONT.
• So, what is indorsement?
• National Bank v Paterson (1909) a South
African case attempts to define indorsement:
“Every signature written on the back of such
instrument is an indorsement”.
• Ordinary legal meaning is the signing of a
name on the back of an instrument (intention
to take liabilities of an indorser).
• Last-named sense followed by delivery.