Chapter XV: Of Bills in Sets
Section 132: Set of bills
This section addresses Bills of Exchange that are created in multiple identical parts for security and safe transmission.
1. Creating Multiple Parts:
- Legal Terminology: Bills of exchange may be drawn in parts, each part being numbered and containing a provision that it shall continue payable only so long as the others remain unpaid. All the parts together make a set; but the whole set constitutes only one bill.
- Simple English Translation (One Bill, Many Copies): Bills, usually foreign ones, can be created in several identical copies (e.g., “First,” “Second,” “Third”). Each copy must state that it is only valid if the other copies haven’t been paid. The entire set of copies counts as a single legal document.
- Practical Example: A company sending a Bill from India to the UK issues it in three parts, sending each part via a different mail service. This ensures the payment order arrives, even if one copy is lost.
2. Extinguishment of the Set:
- Legal Terminology: …and is extinguished when one of the parts, if a separate bill, would be extinguished.
- Simple English Translation (Paying One Pays Them All): Once any one part of the set is paid, the debt is settled, and all other remaining copies (the rest of the set) become void.
- Practical Example: The “Second” copy of a Bill in a set of three is presented and paid. The “First” and “Third” copies are immediately extinguished and are worthless.
3. Exception (Accepting Different Parts):
- Legal Terminology: When a person accepts or indorses different parts of the bill in favour of different persons, he and the subsequent endorsers of each part are liable on such part as if it were a separate bill.
- Simple English Translation (Liability for Separate Copies): If a person recklessly signs two or more copies of the set and transfers them to different people, they are fully liable on each copy as if they were unique, separate bills. This is a severe error and penalty.
- Practical Example: An Indorser signs the “First” part and gives it to Alex, and also signs the “Second” part and gives it to Ben. When the Bill is dishonoured, the Indorser is liable to both Alex and Ben for the full amount of the Bill.