Lecture Notes: Negotiable Instruments and BP22

Overview

• RFPT and BP22: Core of negotiable instruments, particularly focusing on cheques as a type of bill of exchange.
• Understanding BP22 is best when discussed in conjunction with staffa.
• Cheque Bouncing: Often due to insufficient funds.

Key Legal Concepts

• Mala Inse vs. Mala Prohibita:
  • Mala Inse: Acts inherently wrong, requiring criminal intent (mens rea).
  • Mala Prohibita: Acts wrong because they are prohibited by law; intent is irrelevant.

Staffa (Fraud)

• Definition: Defrauding someone, can occur via abuse of confidence or deceit (focus on deceit in lecture).
• Fraudulent Acts: Issuing or post-dating a worthless cheque.
• Requirements for Staffa:
  • Fraud must occur prior or simultaneous to obtaining goods/services.
  • Cheque must be presented for payment and dishonored within 180 days.

BP22 (Bouncing Cheques)

• Nature: Mala prohibita; intent does not matter.
• Legal Obligation: Issuing a cheque that bounces can result in penalties regardless of intent.
• Time Frames:
  • 90 Days: Important for presumption of knowledge;
  • 180 Days: Cheque becomes stale and cannot lead to staffa liability.
• Penalties: Fine and/or imprisonment, dependent on the number of cheques issued.

Presentment for Payment

• Cheque as a Bill of Exchange: Always presented for payment, not acceptance.
• Stale Cheque: Not honored after 180 days.

Legal Requirements and Penalties

• Notice of Dishonor: Essential for establishing liability.
• Cure Period: 3 days for staffa; 5 banking days for BP22 to pay or arrange funds.
• Penalties: Vary based on the amount for staffa; fixed for BP22 regardless of amount.

Differences Between Staffa and BP22

• Staffa: Requires deceit and fraudulent intent.
• BP22: Liability arises from the act of issuing a bounced cheque, irrespective of intent.

Exam Questions Review

• Questions cover aspects of BP22 and legal obligations concerning cheque issuance.
• Important Points:
  • Presumption of knowledge occurs if a cheque is dishonored within 90 days.
  • Payment within cure periods eliminates criminal liability.

Conclusion

• Key Understanding: Intent is critical in staffa, irrelevant in BP22.
• Practical Advice: Always ensure funds are available and understand the legal timeframes associated with cheque issuance.