Bills of Exchange Act

Section 1. Short title Section This Act may be cited as the Bills of Exchange Act.

Section 2. Interpretation Section In this Act, except where the context otherwise requires— "acceptance" means an acceptance completed by delivery or notification; "action" includes counterclaim and set-off; "bank" has the meaning assigned in section 2 of the Banking Act ( Cap. 488 ); "banker" includes a body of persons whether incorporated or not who carry on the business of banking; "bankrupt" includes any person whose estate is vested in a trustee or assignee under the law for the time being in force relating to bankruptcy; "bearer" means the person in possession of a bill or note which is payable to bearer; "bill" means bill of exchange; "Cabinet Secretary" means the Cabinet Secretary for the time being responsible for matters relating to finance; "Central Bank" means the Central Bank of Kenya established under section 3 of the Central Bank of Kenya Act (Cap. 491); "cheque truncation" means a system of cheque clearing and settlement between banks based on electronic data or images or both electronic data and images, without the conventional physical exchange of instruments; "delivery" means transfer of possession, actual or constructive from one person to another; "endorsement"...

Section 3. Bill of exchange defined Section 3(1) A bill of exchange is 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 to or to the order of a specified person or to bearer. Section 3(2) An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange. Section 3(3)(a) an indication of a particular fund out of which the drawee is to reimburse himself or a particular account to be debited with the amount; or Section 3(3)(b) a statement of the transaction which gives rise to the bill, is unconditional. Section 3(4)(a) that it is not dated; Section 3(4)(b) that it does not specify the value given or that any value has been given therefor; Section 3(4)(c) that it does not specify the place where it is drawn or the place where it is payable.

Section 4. Inland and foreign bills Section 4(1)(a) both drawn and payable within East Africa; or Section 4(1)(b) drawn within East Africa upon some person resident therein, and any other bill is a foreign bill. Section 4(2) Unless the contrary appears on the face of the bill the holder may treat it as an inland bill. Section 4(3) For the purposes of this section, "East Africa" means Kenya, Uganda and Tanzania and any other country granted membership to the Community under Article 3 of the Treaty for the East African Community. [Act No. 11 of 2017 , Sch.]

Section 5. Effect where different parties to bill are the same person Section 5(1) A bill may be drawn payable to, or to the order of, the drawer, or it may be drawn payable to, or to the order of, the drawee. Section 5(2) Where a bill drawer and drawee are the same person, or where the drawee is a fictitious person or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or as a promissory note.

Section 6. Address to drawee Section 6(1) The drawee must be named or otherwise indicated in a bill with reasonable certainty. Section 6(2) A bill may be addressed to two or more drawees whether they are partners or not, but an order addressed to two drawees in the alternative or to two or more drawees in succession is not a bill of exchange.

Section 7. Certainty required as to payee Section 7(1) Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty. Section 7(2) A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one of some several payees; and a bill may also be made payable to the holder of an office for the time being. Section 7(3) Where the payee is a fictitious or non-existing person the bill may be treated as payable to bearer.

Section 8. What bills are negotiable Section 8(1) When a bill contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but is not negotiable. Section 8(2) A negotiable bill may be payable either to order or to bearer. Section 8(3) A bill is payable to bearer which is expressed to be so payable, or on which the only or last endorsement is an endorsement in blank. Section 8(4) A bill is payable to order which is expressed to be so payable, or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable. Section 8(5) Where a bill, either originally or by endorsement, is expressed to be 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. Sum payable Section 9(1)(a) with interest; Section 9(1)(b) by stated instalments; Section 9(1)(c) by stated instalments, with a provision that upon default in payment of any instalment the whole shall become due; Section 9(1)(d) according to an indicated rate of exchange or according to a rate of exchange to be ascertained as directed by the bill. Section 9(2) Where the sum payable is expressed in words and also in figures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable. Section 9(3) Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, interest runs from the date of the bill, and if the bill is undated from the issue thereof.

Section 10. Bill payable on demand Section 10(1)(a) which is expressed to be payable on demand, or at sight, or on presentation; or Section 10(1)(b) in which no time for payment is expressed. Section 10(2) Where a bill is accepted or endorsed when it is overdue, it shall, as regards the acceptor who so accepts, or any endorser who so endorses it, be deemed a bill payable on demand.

Section 11. Bill payable at a future time Section 11(1)(a) at a fixed period after date or sight; Section 11(1)(b) on or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening may be uncertain. Section 11(2) An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect.

Section 12. Omission of date in bill payable after date Section where the holder in good faith and by mistake inserts a wrong date; and

Section 13. Ante-dating and post-dating Section 13(1) Where a bill or an acceptance of any endorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance or endorsement, as the case may be. Section 13(2) A bill is not invalid by reason only that it is ante-dated or post-dated, or that it bears date on a Sunday.

Section 14. Computation of time of payment Section three days, called days of grace, are, in every case where the bill itself does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace: Provided that where the last day of grace is a non-business day the bill is due and payable on the next succeeding business day;

Section 15. Case of need Section 15(1) The drawer of a bill and any endorser may insert therein the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonoured by non-acceptance or non-payment; and that person is called the referee in case of need. Section 15(2) It is in the option of the holder to resort to the referee in case of need or not as he may think fit.

Section 16. Optional stipulations by drawer or endorser Section negativing or limiting his own liability to the holder;

Section 17. Definition and requisites of acceptance Section 17(1) The acceptance of a bill is the signification by the drawee of his assent to the order of the drawer. Section 17(2)(a) it must be written on the bill and be signed by the drawee; the mere signature of the drawee without additional words is sufficient; Section 17(2)(b) it must not express that the drawee will perform his promise by any other means than the payment of money.

Section 18. Time for acceptance Section 18(1)(a) before it has been signed by the drawer, or while otherwise incomplete; Section 18(1)(b) when it is overdue, or after it has been dishonoured by a previous refusal to accept, or by non-payment. Section 18(2) When a bill payable after sight is dishonoured by non-acceptance, and the drawee subsequently accepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of first presentment to the drawee for acceptance.

Section 19. General and qualified acceptances Section 19(1)(a) general; or Section 19(1)(b) qualified. Section 19(2) A general acceptance assents without qualification to the order of the drawer; a qualified acceptance in express terms varies the effect of the bill as drawn. Section 19(3)(a) conditional, that is to say, which makes payment by the acceptor dependent on the fulfilment of a condition therein stated; Section 19(3)(b) partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn; Section 19(3)(c) local, that is to say, an acceptance to pay only at a particular specified place: Section 19(3)(d) qualified as to time; Section 19(3)(e) the acceptance of some one or more of the drawees, but not of all.

Section 20. Inchoate instruments Section 20(1) Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor, or an endorser; and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit. Section 20(2) In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its completion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Section 20(3) Reasonable time for this purpose is a question of fact: Provided that if any such instrument after completion is negotiated to a holder in due course it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given.

Section 21. Delivery Section 21(1) Every contract on a bill, whether it be the drawer’s, the acceptor’s or an endorser’s, is incomplete and revocable, until delivery of the instrument in order to give effect thereto: Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person entitled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable. Section 21(2)(a) in order to be effectual must be made either by or under the authority of the party drawing, accepting or endorsing, as the case may be; Section 21(2)(b) may be shown to have been conditional or for a special purpose only, and not for the purpose of transferring the property in the bill. Section 21(3) If the bill be in the hands of a holder in due course, a valid delivery of the bill by all parties prior to him so as to make them liable to him is conclusively presumed. Section 21(4) Where a bill is no longer in the possession of a party who has signed it as drawer, acceptor or endorser, a valid and unconditional delivery by him is presumed until the contrary is proved.

Section 22. Capacity of parties Section 22(1) Capacity to incur liability as a party to a bill is co-extensive with capacity to contract: Provided that nothing in this section shall enable a corporation to make itself liable as drawer, acceptor or endorser of a bill unless it is competent so to do under the law for the time being in force relating to corporations. Section 22(2) Where a bill is drawn or endorsed by an infant, minor or corporation having no capacity or power to incur liability on a bill, the drawing or endorsement entitles the holder to receive payment of the bill, and to enforce it against any other party thereto.

Section 23. Signature essential to liability Section where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed it in his own name;

Section 24. Forged or unauthorized signature Section Subject to the provisions of this Act, where a signature on a bill is forged or placed thereon without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority: Provided that nothing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery.

Section 25. Procuration signatures Section A signature by procuration operates as notice that the agent has but a limited authority to sign, and the principal is only bound by such signature if the agent in so signing was acting within the actual limits of his authority.

Section 26. Persons signing as agent or in representative capacity Section 26(1) Where a person signs a bill as drawer, endorser or acceptor, and adds words to his signature, indicating that he signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not exempt him from personal liability. Section 26(2) In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the construction most favourable to the validity of the instrument shall be adopted.

Section 27. Value and holder for value Section 27(1)(a) any consideration sufficient to support a simple contract; Section 27(1)(b) an antecedent debt or liability, which is deemed valuable consideration whether the bill is payable on demand or at a future time. Section 27(2) Where value has at any time been given for a bill the holder is deemed to be a holder for value as regards the acceptor and all parties to the bill who became parties prior to that time. Section 27(3) Where the holder of a bill has a lien on it, arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien.

Section 28. Accommodation bill or party Section 28(1) An accommodation party to a bill is a person who has signed a bill as drawer, acceptor or endorser, without receiving value therefor, and for the purpose of lending his name to some other person. Section 28(2) An accommodation party is liable on the bill to a holder for value; and it is immaterial whether, when the holder took the bill, he knew that party to be an accommodation party or not.

Section 29. Holder in due course Section 29(1)(a) that he became the holder of it before it was overdue, and without notice that it had been previously dishonoured, if that was the fact; Section 29(1)(b) that he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it. Section 29(2) In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud. Section 29(3) A holder (whether for value or not) who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.

Section 30. Presumption of value and good faith Section 30(1) Every party whose signature appears on a bill is prima facie deemed to have become a party thereto for value. Section 30(2) Every holder of a bill is prima facie deemed to be a holder in due course; but if in an action on a bill it is admitted or proved that the acceptance, issue or subsequent negotiation of the bill is affected with fraud, duress or force and fear, or illegality, the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill.

Section 31. Negotiation of bill Section 31(1) A bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill. Section 31(2) A bill payable to bearer is negotiated by delivery. Section 31(3) A bill payable to order is negotiated by the endorsement of the holder completed by delivery. Section 31(4) Where the holder of a bill payable to his order transfers it for value without endorsing it, the transfer gives the transferee such title as the transferor had in the bill, and the transferee in addition acquires the right to have the endorsement of the transferor. Section 31(5) Where any person is under obligation to endorse a bill in a representative capacity, he may endorse the bill in such terms as to negative personal liability.

Section 32. Requisites of a valid endorsement Section it must be written on the bill itself and be signed by the endorser; the simple signature of the endorser on the bill, without additional words, is sufficient; while an endorsement written on an allonge, or on a "copy" of a bill issued or negotiated in a country where "copies" are recognized, is deemed to be written on the bill itself;

Section 33. Conditional endorsement Section Where a bill purports to be endorsed conditionally, the condition may be disregarded by the payer, and payment to the endorsee is valid whether the condition has been fulfilled or not.

Section 34. Endorsement in blank and special endorsement Section 34(1) An endorsement in blank specifies no endorsee, and a bill so endorsed becomes payable to bearer. Section 34(2) A special endorsement specifies the person to whom, or to whose order, the bill is to be payable. Section 34(3) The provisions of this Act relating to a payee apply with the necessary modifications to an endorsee under a special endorsement. Section 34(4) When a bill has been endorsed in blank, any holder may convert the blank endorsement into a special endorsement by writing above the endorsee’s signature a direction to pay the bill to or to the order of himself or some other person.

Section 35. Restrictive endorsement Section 35(1) An endorsement is restrictive which prohibits the further negotiation of the bill or which expresses that it is a mere authority to deal with the bill as thereby directed and not a transfer of the ownership thereof, as, for example, if a bill be endorsed "Pay D only" , or "Pay D for the account of X" or "Pay D or order for collection" . Section 35(2) A restrictive endorsement gives the endorsee the right to receive payment of the bill and to sue any party thereto that his endorser could have sued, but gives him no power to transfer his rights as endorsee unless it expressly authorizes him to do so. Section 35(3) Where a restrictive endorsement authorizes further transfer, all subsequent endorsees take the bill with the same rights and subject to the same liabilities as the first endorsee under the restrictive endorsement.

Section 36. Negotiation of overdue or dishonoured bill Section 36(1)(a) restrictively endorsed; or Section 36(1)(b) discharged by payment or otherwise. Section 36(2) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thenceforward no person who takes it can acquire or give a better title than that which the person from whom he took it had. Section 36(3) A bill payable on demand is deemed to be overdue within the meaning and for the purposes of this section when it appears on the face of it to have been in circulation for an unreasonable length of time; and what is an unreasonable length of time for this purpose is a question of fact. Section 36(4) Except where an endorsement bears date after the maturity of the bill, every negotiation is prima facie deemed to have been effected before the bill was overdue. Section 36(5) Where a bill which is not overdue has been dishonoured, any person who takes it with notice of the dishonour takes it subject to any defect of title attaching thereto at the time of dishonour, but nothing in this subsection shall affect the rights of a holder in due course.

Section 37. Negotiation of bill to party already liable thereon Section Where a bill is negotiated back to the drawer, or to a prior endorser, or to the acceptor, that party may, subject to the provisions of this Act, reissue and further negotiate the bill, but he is not entitled to enforce payment of the bill against any intervening party to whom he was previously liable.

Section 38. Rights of the holder

Section 39. When presentment for acceptance is necessary Section 39(1) Where a bill is payable after sight, presentment for acceptance is necessary in order to fix the maturity of the instrument. Section 39(2) Where a bill expressly stipulates that it shall be presented for acceptance, or where a bill is drawn payable elsewhere than at the residence or place of business of the drawee, it must be presented for acceptance before it can be presented for payment. Section 39(3) In no other case is presentment for acceptance necessary in order to render liable any party to the bill. Section 39(4) Where the holder of a bill, drawn payable elsewhere than at the place of business or residence of the drawee, has not time, with the exercise of reasonable diligence, to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawer and endorsers.

Section 40. Time for presenting bill payable after sight Section 40(1) Subject to the provisions of this Act, when a bill payable after sight is negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time. Section 40(2) If he does not do so, the drawer and all endorsers prior to that holder are discharged. Section 40(3) In determining what is a reasonable time within the meaning of this section, regard shall be had to the nature of the bill, the usage of trade with respect to similar bills, and the facts of the particular case.

Section 41. Rules as to presentment for acceptance, and excuses for non-presentment Section 41(1)(a) the presentment must be made by or on behalf of the holder to the drawee or to some person authorized to accept or refuse acceptance on his behalf at a reasonable hour on a business day and before the bill is overdue; Section 41(1)(b) where a bill is addressed to two or more drawees, who are not partners, presentment must be made to them all, unless one has authority to accept for all, then presentment may be made to him only; Section 41(1)(c) where the drawee is dead, presentment may be made to his personal representative; Section 41(1)(d) where the drawee is bankrupt, presentment may be made to him or to his trustee; Section 41(1)(e) where authorized by agreement or usage, a presentment through the Post Office is sufficient. Section 41(2)(a) where the drawee is dead or bankrupt, or is a fictitious person or a person not having capacity to contract by bill; Section 41(2)(b) where, after the exercise of reasonable diligence, such presentment cannot be effected; Section 41(2)(c) where, although the presentment has been irregular, acceptance has been refused on some other ground. Sect...

Section 42. Non-acceptance Section When a bill is duly presented for acceptance, and is not accepted within the customary time, the person presenting it must treat it as dishonoured by non- acceptance; and if he does not, the holder shall lose his right of recourse against the drawer and endorsers.

Section 43. Dishonour by non-acceptance and its consequences Section 43(1)(a) when it is duly presented for acceptance, and an acceptance as is prescribed by this Act is refused or cannot be obtained; or Section 43(1)(b) when presentment for acceptance is excused and the bill is not accepted. Section 43(2) Subject to the provisions of this Act, when a bill is dishonoured by non-acceptance, an immediate right of recourse against the drawer and endorsers accrues to the holder, and no presentment for payment is necessary.

Section 44. Duties as to qualified acceptances Section 44(1) The holder of a bill may refuse to take a qualified acceptance, and, if he does not obtain an unqualified acceptance, may treat the bill as dishonoured by non-acceptance. Section 44(2) Where a qualified acceptance is taken, and the drawer or an endorser has not expressly or impliedly authorized the holder to take a qualified acceptance, or does not subsequently assent thereto, the drawer or endorser is discharged from his liability on the bill: Provided that the provisions of this subsection shall not apply to a partial acceptance, whereof due notice has been given; and where a foreign bill has been accepted as to part, it must be protested as to the balance. Section 44(3) When the drawer or endorser of a bill receives notice of a qualified acceptance, and does not, within a reasonable time, express his dissent to the holder, he shall be deemed to have assented thereto.

Section 45. Rules as to presentment for payment Section 45(1) Subject to the provisions of this Act, a bill must be duly presented for payment; and if it be not so presented, the drawer and endorsers shall be discharged. Section 45(2)(a) where the bill is not payable on demand, presentment must be made on the day it falls due; Section 45(2)(b) where the bill is payable on demand, then, subject to the provisions of this Act, presentment must be made within a reasonable time after its issue in order to render the drawer liable, and within a reasonable time after its endorsement, in order to render the endorser liable; and in determining what is a reasonable time, regard shall be had to the nature of the bill, the usage of trade with regard to similar bills, and the facts of the particular case; Section 45(2)(c) presentment must be made by the holder or by some person authorized to receive payment on his behalf at a reasonable hour on a business day at the proper place, as hereinafter defined, either to the person designated by the bill as payer, or to some person authorized to pay or refuse payment on his behalf, if with the exercise of reasonable diligence such person can there be f...

Section 46. Excuses for delay or non-presentment for payment Section 46(1) Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct or negligence; but when the cause of delay ceases to operate, presentment must be made with reasonable diligence. Section 46(2)(a) where, after the exercise of reasonable diligence, presentment, as required by this Act, cannot be effected; but the fact that the holder has reason to believe that the bill will, on presentment, be dishonoured, does not dispense with the necessity for presentment; Section 46(2)(b) where the drawee is a fictitious person; Section 46(2)(c) as regards the drawer, where the drawee or acceptor is not bound, as between himself and the drawer, to accept or pay the bill, and the drawer has no reason to believe that the bill would be paid if presented; Section 46(2)(d) as regards an endorser, where the bill was accepted or made for the accommodation of that endorser, and he has no reason to expect that the bill would be paid if presented; Section 46(2)(e) by waiver of presentment, expressed or implied.

Section 47. Dishonour by non-payment Section 47(1)(a) when it is duly presented for payment and payment is refused or cannot be obtained; or Section 47(1)(b) when presentment is excused and the bill is overdue and unpaid. Section 47(2) Subject to the provisions of this Act, when a bill is dishonoured by non- payment, an immediate right of recourse against the drawer and endorsers accrues to the holder.

Section 48. Notice of dishonour and effect of non-notice Section where a bill is dishonoured by non-acceptance, and notice of dishonour is not given, the rights of a holder in due course, subsequent to the omission, shall not be prejudiced by the omission;

Section 49. Rules as to notice of dishonour Section the notice must be given by or on behalf of the holder, or by or on behalf of an endorser who, at the time of giving it, is himself liable on the bill;

Section 50. Excuses for non-notice and delay Section 50(1) Delay in giving notice of dishonour is excused where the delay is caused by circumstances beyond the control of the party giving notice, and not imputable to his default, misconduct or negligence; but when the cause of delay ceases to operate, the notice must be given with reasonable diligence. Section 50(2)(a) when, after the exercise of reasonable diligence, notice as required by this Act cannot be given to or does not reach the drawer or endorser sought to be charged; Section 50(2)(b) by waiver express or implied; and notice of dishonour may be waived before the time of giving notice has arrived or after the omission to give due notice; Section 50(2)(c) where drawer and drawee are the same person; Section 50(2)(c)(i) where drawer and drawee are the same person; Section 50(2)(c)(ii) where the drawee is a fictitious person or a person not having capacity to contract; Section 50(2)(c)(iii) where the drawer is the person to whom the bill is presented for payment; Section 50(2)(c)(iv) where the drawee or acceptor is as between himself and the drawer under no obligation to accept or pay the bill; Section 50(2)(c)(v) where the...