THURSDAY, MARCH 31, 1983 -
6
BILLS OF EXCHANGE BILL
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HE BILLS OF EXCHANGE (AMENDMENT) BILL 1983, WHICH IS SIGNED TO IMPLEMENT THE RECOMMENDATIONS OF THE REPORT OF
LAW REFORM COMMISSION GOVERNING THE LIABILITY OF PERSONS GNING CHEQUES FOR THEIR COMPANIES, IS PUBLISHED IN TODAY'S AZETTE.
HE BILL IS EXPECTED TO BE INTRODUCED IN THE LEGISLATIVE COUNCIL ON APRIL 13.
THE LAW REFORM COMMISSION REVEALED IN ITS REPORT ON COMMERCIAL LAW GOVERNING BILLS OF EXCHANGE THAT MANY BUSINESSMEN IN HONG KONG SIGN CHEQUES ON BEHALF OF THEIR COMPANIES BELIEVING TUT ONLY THE COMPANY, AND NOT THEY THEMSELVES PERSONALLY, ARE LIABLE ON THE CHEQUE.
BUT THE REPORT SAID IF THE COMPANY FAILS TO MEET THE CHEQUE BECAUSE IT IS OUT OF FUNDS, THEN UNLESS THE PROPER WORDS ARE WRITTEN ON THE CHEQUE BY THE BUSINESSMAN, HE IN FACT BECOMES PERSONALLY LIABLE.
THE REPORT SAID THE COMMISSION HAD DISCOVERED THAT THERE WERE SOME FOUR MILLION CHEQUES A YEAR IN HONG KONG WHERE THE SIGNERS MIGHT BECOME LIABLE IF THE COMPANIES FAILED TO PAY.
TO SOLVE THE POTENTIAL PROBLEM FOR BUSINESSMEN, THE COMMISSION RECOMMENDED:
(1) THAT AS A MATTER OF PRUDENT BANKING PRACTICE,
BANKERS SHOULD CONSIDER THE DESIRABILITY OF ADVISING COMPANIES WHO ARE THEIR CLIENTS THAT, AS THE LAW STANDS AT THE MOMENT, IT IS ONLY THE USE OF THE WORDS +FOR+ OR +ON BEHALF OF+ OR +FOR AND ON BEHALF OF+ AND THE IR COMPANY'S NAME THAT WILL ASSUREDLY AVOID PERSONAL LIABILITY UNDER THE BILLS OF EXCHANGE ORDINANCE OF SIGNATORIES ON A DISHONOURED COMPANY CHEQUE;
(2) THAT THE BILLS OF EXCHANGE ORDINANCE SHOULD BE AMENDED TO MAKE IT CLEAR THAT WHERE A PERSON'S SIGNATURE APPEARS ON A CHEQUE ONLY AS A COMPOSITE PART OF HIS COMPANY'S SIGNATURE, THAT PERSON SHOULD NOT BE PERSONALLY LIABLE; AND
(3) THAT NO AMENDMENT NEED BE MADE IN RESPECT OF
THE TIME WITHIN WHICH NOTICE MUST BE GIVEN THAT A CHEQUE HAS BEEN DISHONOURED.
THE COMMISSION ALSO RECOMMENDED THAT BANKERS SHOULD CONSIDER THE DESIRABILITY OF INVITING THE ATTENTION OF THEIR CORPORATE CLIENTS TO THE PROVISIONS OF SECTION 93 OF THE COMPANIES ORDINANCE. THE EFFECT OF THESE PROVISIONS IS THAT FAILURE TO SET OUT THE COMPANY'S NAME FULLY OR ACCURATELY, OR IF IN CHINESE CHARACTERS WITHOUT THE CHINESE CHARACTERS, IN PERSONAL LIABILITY ON THE CHEQUE FOR THE SIGNATORY.
COULD RESULT