WHEN a banker has discounted a bill, it is handed to the accountant, who will see that it is drawn on a right stamp. The accountant will read it through, and see that it is properly drawn, and will observe that the sum in writing corresponds with the sum expressed in figures, and that no alteration has taken place in the amount, the date, the term, or the place at which it is made payable; for these are material alterations, and would affect the validity of the bill. He will then calculate the time at which it falls due, and place this date upon the bill, or, if it was there before, he will check it, and see that it is right. He will then turn it over, and see that it is indorsed by the party in whose favour it is drawn, and also that the subsequent indorsements are regular and properly spelled; for if there be a variation of a single letter in the spelling of a name, the payment of the bill could not be legally enforced. He will also observe that the bill is indorsed by the party for whom it is discounted. He will then pass the bill through the books, and at the close of the day deliver it with the others to the banker. The banker will, on the following morning, put these bills away in his bill-case according to the dates at which they fall due. This point should be recollected by persons who have to get bills from a banker before they are due; for, after they have given the amount and the names, the next question asked them will be,
"When is it due?" for among a multitude of bills, the only way of readily finding any individual bill, is to turn to those that fall due on the same day. Every day the banker looks out the bills that fall due on the following day, and hands them to the chief clerk (or, in some cases, the chief clerk himself has the charge of the bills), who, after checking them against the books, distributes them among the clerks who are to collect them. If the bill be not paid, it is noted on the same evening, if necessary, and on the following morning returned to the customer for whom it was discounted, and his account is debited for the amount. But if the party has not the sum to his credit, and the banker does not like to trust him, he merely receives notice of its dishonour; and notice is also given to every other party to the bill, with a demand for immediate payment. The bill has now become that hated object, an "overdue bill;" and after a while, if the parties are supposed to be " worth powder and shot," it is handed to the bank's solicitor.
The law of bills of exchange, founded to a large extent upon mercantile custom, was codified in 1882 by the passing of the "Bills of Exchange Act, 1882" (45 and 46 Vict., c. 61), and a thorough knowledge of this Act is of the utmost importance to all bankers.
A bill of exchange is therein described as " 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." The person signing the order is the drawer of the bill, the person to whom it is addressed is the drawee, who, after he has admitted his liability by "accepting" the bill, becomes the accepter. The person to whom it is payable is the payee, who becomes the endorser when he writes his name on the back of the bill as a discharge. If the endorser writes on the back of the bill above his signature, "pay to the order of X.," X. is the endorsee. The payee or endorsee of a bill who is in possession of it, or, if a bearer bill, the bearer of it, is the holder. The following is the ordinary form of a bill of exchange:
London. June 30th. 1906.
In drawing a bill the name of the place from which it is dated should always be mentioned, otherwise it may not be possible to tell whether the bill is an inland or a foreign one. It is usual to insert that value has been received for the bill, but the omission of this statement does not invalidate the bills. Bills are frequently drawn in a "set" of two or three parts, "each part of the set being numbered and containing a reference to the other parts, the whole of the parts constituting one bill" (Sect. 71, Bills of Exchange Act). In this case only one part of the bill requires stamping, and only one part is accepted by the drawee, though it is customary to negotiate one part, while another part is sent forward for acceptance. In paying demand drafts drawn upon himself in a set, a banker will be careful to see that he has not previously paid another of the parts.
A bill may be drawn payable on demand, at sight, on presentation, at a specified time after date, at a specified time after sight, or on a specified date. In calculating the due date of bills which are not payable at sight, on demand or on presentation, three days, called "days of grace," must be added to the date of payment as fixed by the bill, unless the bill is drawn in the form, "On Oct. 30th fixed." The Bank of England, however, always pay the seven-day "post bills" which they issue, without waiting for the expiration of the days of grace. In no other European country are days of grace allowed.
If the due date should fall upon a Sunday, Christmas Day, Good Friday, or day appointed by Royal proclamation as a public fast or thanksgiving day, the bill is due upon the preceding business day. Should it, however, fall due upon a Bank Holiday, or should the last day of grace be a Sunday, and the second day of grace a Bank Holiday, the bill is payable on the succeeding business day. A month always means a calendar month. Thus a bill drawn on May 3rd, at one month after date, is due on June 6th, and bills drawn on August 30th and August 31st, at one month after date, are each due on October 3rd.