Negotiable Instruments and the Bills of Exchange Act (Ghana)

This set of vocabulary flashcards defines key roles, legal documents, and statutory requirements related to negotiable instruments and the Bills of Exchange Act 1961 of Ghana.

Negotiable Instrument

A document of title embodying rights to the payment of money which is transferable by delivery (or indorsement and delivery) so that a bona fide transferee for value may acquire a good and complete title despite defects in the predecessor's title.

Discounting

The process where a seller sells a bill of exchange to their bank for an immediate but reduced cash payment before the instrument reaches maturity.

Instrument

A document that physically embodies a payment obligation so that the possessor is presumed to be entitled to claim the money it represents.

Document of title to money

An instrument that contains an undertaking to pay a sum of money or an order to another to pay a sum of money; it must be distinguished from a document of title to goods.

In a deliverable state

An instrument described as being payable to bearer or payable to a specified person or her order that has been signed on the back (indorsed) by that person.

Holder

The possessor of an instrument in a deliverable state, or the payee or indorsee of a bill who is in possession of it.

True Owner

The person entitled to the property in and possession of the instrument against all others.

Negotiability (Strict Sense)

The capacity of an instrument to be acquired free from defects in the title of prior parties.

Bills of Exchange Act 1961 (Ghana)

The primary source of law of bills of exchange, often abbreviated as the BEA.

Bill of Exchange

An unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money.

Drawer

The person who draws the bill and gives the order to pay.

Drawee

The person upon whom the bill is drawn and who is ordered to pay.

Acceptor

The status of a drawee once they have indicated their willingness to pay.

Payee

The person identified in the bill as the individual to whom, or to whose order, the money is to be paid.

Bearer

The person in possession of a bill that is drawn payable to bearer.

Indorsement in blank

Occurs when the indorser simply signs the bill without specifying an indorsee, making the bill payable to bearer.

Special indorsement

Occurs when the indorser specifies the person to whom, or to whose order, the bill is to be payable.

Inchoate instrument

A signed document that fails to comply with all requirements of Section $1(1)$ of the BEA but is delivered so the missing details may be completed.

Sum certain in money

A requirement for a bill of exchange where 'money' includes legal tender and foreign currency, and the sum remains certain even if it includes interest or stated instalments.

Nemo dat rule (Exception)

A major legal exception where a bona fide holder for value of a negotiable instrument can acquire better title than that of their transferor.

Mercantile Usage (Conditions)

For a court to recognize an instrument via usage, the usage must be reasonable, certain, notorious, general, and the instrument's terms must not be incompatible with negotiability.

Bearer Bill

A bill transferred by mere delivery, occurring when expressed 'Pay bearer', indorsed in blank, or when the payee is a fictitious or non-existing person.

Order Bill

A bill transferred by the indorsement of the payee or holder and delivery of the instrument.

On Demand

According to Section $8(1)$ of the BEA, a bill expressed to be payable at sight, on presentation, or in which no time for payment is expressed.

Determinable Future Time

According to Section $9$ of the BEA, a bill payable at a fixed period after date or sight, or upon an event certain to happen even if the exact time is uncertain.