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A G on Bills of Exchange Act



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STATEMENT BY THE COMMONWEALTH ATTORNEY-GENERAL,

MR NIGEL BOWEN, Q.C.

New procedures which make it easier for members of

the public to cash order cheques and for bankers to reduce

the paperwork associated with such cheques will come

into operation on May 1 this year.

The Commonwealth Attorney-General, Mr Nigel Bowen,

Q.C., said today the changes were contained in the Bills of

Exchange Act which was passed by the Parliament this year.

The Governor-General had proclaimed May 1 as the date when

the Act would become effective.

■ Mr Bowen said that after May 1, it would no

longer be necessary to indorse order cheques and bank

drafts which were paid into the bank account of the

person named in the cheque.

He said it was estimated that at least 200 million

order cheques were issued in Australia annually. A substantial

number of these cheques were issued by the Government as

social services payments and income tax rebates.

Commercial institutions such as insurance companies also

issued a large number of order cheques.

Of the 200 million issued, three quarters of

that number were paid into the bank account of the person

to whom the cheque was made out. The new Act would make it

no longer necessary for the person who received a cheque

to sign it if he paid it into his own bank account.

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However, if the cheque were to be cashed or

negotiated to another person, such as a shopkeeper, the

cheque would have to be signed as at present. This

precaution would provide a valuable protection both to

the true owner of the cheque and to the person who had

drawn it.

Mr Bowen said much unnecessary work by members of

the public, commercial institutions and bankers was

involved in the present system. It required over

150 million unnecessary signatures each year by members

of the public and commercial institutions and also

involved bankers spending a considerable amount of time

examining these indorsements. It was estimated that over

2 million order cheques were dishonoured each year because

of lack of indorsement or for irregular, indorsement.

The Attorney-General said that under the existing

law, the drawer of an indorsed order cheque could use it

after it had been paid by his banker as prima facie evidence

that the person named on the cheque had received payment.

The new Act contained a provision that would ensure that

a paid unindorsed order cheque would have the same value

as evidence of payment as a paid indorsed order cheque

now had.

Mr Bowen said that the eommencment of the Act -

had been delayed until May 1 to enable the commercial

community and bankers to make any modification to their present

procedures they considered necessary.

22/71

Canberra.

April 19,· 1971.