Methods of Payment
o Used in Sale of Goods (money needs to be discharged for consideration), Carriage of
Goods by Sea transactions (BoL – to provide freight)
Terminology
Negotiable ▪ Transferability vs Negotiability - doesn’t mean that the
documentary payment method is negotiable if it is transferable
▪ Legal document/instrument that discharges a payment obligation
(e.g. promissory note, IOU, bill of lading)
▪ Triangular relationship in cheques (instruction to bank) (Bill of
Exchange Act 1882, section 3)
▪ Transferable by delivery alone or by delivery and indorsement
(signing on back of document) (Bill of Exchange Act 1882, section
31)
▪ Negotiation or transfer of document is sufficient to pass title of
doc or instrument to a transferee without any further legal
requirement (i.e., registration or notice)
Nemo dat quod ▪ Negotiable payment methods qua exceptions
[ille] non habet ▪ One cannot give what one does not have
▪ Facilitates free-flow of business – would be too cumbersome to
constantly check the legitimacy of a cheque
▪ Defect in the good title of the transferee is irrelevant as long as
there is valuable consideration and in good faith, and without
notice of conflicting title claims or defences, transferee’s title is
not affected by any defects in the title of transferor
▪ Aka a bona fide purchaser for value without notice or equity’s
darling
- A holder in due course (s 29 Bills of Exchange 1882) – whilst it
is transferable it is not negotiable (effect of crossing cheques
s.81 Bills of Exchange Act 1882)
Documentary ▪ Physical property which carries significant intangible rights
intangible ▪ Documentary payments, negotiable instruments: bills of
exchange, promissory notes or simple transferable documents
(bearer shares)
Thing (chose) in ▪ Intangible property enjoyable by right to sue (personal right in
action property)
▪ A right in property that can only be claimed or enforced by action
and not by taking physical possession – Torkington v Magee
[1902]
▪ Can be debt owed by another person, shares in company or legal
claim
36
o Used in Sale of Goods (money needs to be discharged for consideration), Carriage of
Goods by Sea transactions (BoL – to provide freight)
Terminology
Negotiable ▪ Transferability vs Negotiability - doesn’t mean that the
documentary payment method is negotiable if it is transferable
▪ Legal document/instrument that discharges a payment obligation
(e.g. promissory note, IOU, bill of lading)
▪ Triangular relationship in cheques (instruction to bank) (Bill of
Exchange Act 1882, section 3)
▪ Transferable by delivery alone or by delivery and indorsement
(signing on back of document) (Bill of Exchange Act 1882, section
31)
▪ Negotiation or transfer of document is sufficient to pass title of
doc or instrument to a transferee without any further legal
requirement (i.e., registration or notice)
Nemo dat quod ▪ Negotiable payment methods qua exceptions
[ille] non habet ▪ One cannot give what one does not have
▪ Facilitates free-flow of business – would be too cumbersome to
constantly check the legitimacy of a cheque
▪ Defect in the good title of the transferee is irrelevant as long as
there is valuable consideration and in good faith, and without
notice of conflicting title claims or defences, transferee’s title is
not affected by any defects in the title of transferor
▪ Aka a bona fide purchaser for value without notice or equity’s
darling
- A holder in due course (s 29 Bills of Exchange 1882) – whilst it
is transferable it is not negotiable (effect of crossing cheques
s.81 Bills of Exchange Act 1882)
Documentary ▪ Physical property which carries significant intangible rights
intangible ▪ Documentary payments, negotiable instruments: bills of
exchange, promissory notes or simple transferable documents
(bearer shares)
Thing (chose) in ▪ Intangible property enjoyable by right to sue (personal right in
action property)
▪ A right in property that can only be claimed or enforced by action
and not by taking physical possession – Torkington v Magee
[1902]
▪ Can be debt owed by another person, shares in company or legal
claim
36
