The concepts of bills of exchange and promissory notes as legal tender and payment methods in Australia can be somewhat complex. While there are cases and legal principles that discuss these instruments, particularly in relation to contracts, negotiability, and payment obligations, it’s essential to clarify that bills of exchange and promissory notes are not “legal tender” in the same way that Australian currency (such as banknotes issued by the Reserve Bank of Australia) is. However, they are recognized as negotiable instruments for making payments.
Key Concepts
– Legal Tender: In Australia, legal tender is defined under the Currency Act 1965, which specifies that Australian notes and coins are the only forms of money that must be accepted as payment for debts. Bills of exchange and promissory notes do not fall under this definition.
– Bills of Exchange and Promissory Notes: Both instruments are recognized under the Bills of Exchange Act 1909 and the National Consumer Credit Protection Act 2009, which govern their use and enforcement. They are negotiable instruments and can serve as a means to settle debts.
– Maxim of Law: The maxim “payment rejected is payment received” implies that if a valid offer of payment is refused, the debt may be considered discharged.
Relevant Case Law
Here are some Australian case law precedents and legal provisions that may be relevant to the understanding of bills of exchange, promissory notes, and payment obligations:
1. Wolverhampton Corporation v. Emmons (1885) 28 Ch D 216:
– This case demonstrates principles related to the negotiability of instruments. It discussed the rights of parties involved in a promissory note agreement.
2. Re: S.W. Swenson Pty Ltd [1979] 2 NSWLR 337:
– This case considered the enforceability of promissory notes. It highlighted that a promissory note is a written promise to pay a specified sum, and parties can enforce their rights under it.
3. Jackson v. Royal Bank of Scotland [2005] EWCA Civ 367 (although it is a UK case, it is often referenced in Australian contexts):
– This case illustrates principles related to the validity and enforceability of negotiable instruments and conditions under which payment offers may be rejected.
4. Cameron v. MCL Pty Ltd [2000] QCA 46:
– This case involved the transfer of the rights to a promissory note. It illustrated the understanding of enforcement when it comes to agreements involving notes as debt instruments.
5. Re: A & H Drilling Pty Ltd [2009] NSWSC 1368:
– This case dealt with issues surrounding the enforceability of promissory notes and the obligations of the parties involved. It reaffirmed the legal standing of these instruments in transactions.
Maxim of Law
The maxim “payment rejected is payment received” is typically a principle found in contract law. If a creditor refuses a legitimate offer of payment, they may lose the right to claim the debt, as they have effectively rejected the payment. This principle can be important in disputes over debts, provided that the offer made was valid, and the payment was unused in bad faith.
Conclusion
While bills of exchange and promissory notes are valid and enforceable means of settling debts, they are not considered legal tender in Australia. The principle behind “payment rejected is payment received” emphasizes that a creditor who refuses to accept a proper offer of payment may forfeit their right to collect on the debt. Each case relevant to bills of exchange and promissory notes illustrates the nuances in their application and enforcement in ensuring obligations are met.