MPs mull over draft law on forms of payment

The draft law on negotiable instruments – cheques, bills of exchange and others, which was tabled before legislators last Friday, was still the only item on the agenda at the lower chamber of parliament yesterday.

The draft law on negotiable instruments – cheques, bills of exchange and others, which was tabled before legislators last Friday, was still the only item on the agenda at the lower chamber of parliament yesterday.

A negotiable instrument is a specialized type of “contract” for the payment of money that is unconditional and capable of transfer by negotiation. Common examples include cheques, banknotes (paper money), and commercial paper.

By press time, the MPs were still examining the 62-page document presented by parliament’s committee on the economy and commerce and, article nine – instrument payable on contingency, was one of the articles thoroughly queried by many including, Marie Therese Murekatete before endorsement.

“I still need clarification on article nine of this bill. What does it really mean here? What instruments are these?”

Murekatete posed, referring to the seemingly complicated Kinyarwanda version of the bill.

English and French versions were soon after made available, apparently making it easier for the MPs to go through the bill’s form and interpretation.

In a broad sense, a negotiable instrument is a written contractual obligation which requires the payment of money. Article nine of the bill states that an instrument expressed to be payable on a contingency is not a negotiable instrument and the happening of the event does not cure the defect.

Chapter one of the bill – general provisions, indicates that more light will be shed on several issues, including the requirements of a corporation, the application of the civil code and protest evidence.

“The rules in the civil code, including the law on commerce and contracts, that are not consistent with this law, shall apply to negotiable instruments,” states article six.

Apart from cheques and bills of exchange, promissory notes and warehouse receipts are the other common forms of negotiable instruments.

On protest evidence – article seven – it is noted that a bill of exchange, a promissory note or a warehouse receipt that are protested against or their copies signed by a public notary shall be considered as evidence in a court of law.

The bill clearly gets rid of ambiguities as it defines all these instruments.

Usage

While bearer tools are rarely created as such, a container of commercial paper with the holder designated as payee can change the instrument to a bearer instrument by an endorsement.

The proper holder simply signs the back of the instrument and the instrument becomes bearer paper, although in recent years, third party checques are not being honored by most banks unless the original payee has signed a notarized document stating such.

Alternately, an individual or company may write a checque payable to “Cash” or “Bearer” and create a bearer instrument. Great care should be taken with the security of the instrument, as it is legally almost as good as cash.

Ends

 

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