BILLS OF EXCHANGE ACT
Act · Trade
An Act codifies the law on bills of exchange, cheques, and promissory notes in Nigeria, defining rights and obligations of parties. It targets banks, businesses, importers, exporters, and legal practitioners involved in these instruments. This enables secure and confident commercial transactions.
BILLS OF EXCHANGE ACT
What Is This Policy?
An Act codifying the law relating to bills of exchange, cheques, and promissory notes in Nigeria, establishing the rights and obligations of parties to these negotiable instruments.
Who Does It Target?
Banks and financial institutions handling cheques and bills of exchange Businesses using bills of exchange for trade financing Importers and exporters using documentary bills Legal practitioners advising on negotiable instrument disputes
What Does It Aim to Achieve?
Provide a clear legal framework governing negotiable instruments (bills of exchange, cheques, and promissory notes), enabling confident commercial and financial transactions.
Key Features
Bill of Exchange Definition: Defines a bill of exchange as an unconditional order in writing requiring the drawee to pay a specified sum to the payee. Cheque Provisions: Governs cheques as a special type of bill of exchange drawn on a bank, including crossing, endorsement, and dishonour. Negotiability: Prescribes how bills of exchange may be transferred by endorsement, enabling their use in trade finance. Dishonour and Notice: Sets out the consequences of non-payment (dishonour) and the notice requirements to preserve claims against endorsers.
Current Status
Rollout Stage: Active Coverage: Nationwide commercial and financial transactions Beneficiaries: Banks, businesses, traders, and all parties using negotiable instruments Funding: Not applicable — commercial law framework
How to Access
All parties to a bill of exchange must comply with prescribed formalities for the instrument to be legally valid Dishonoured cheques must be returned within the prescribed clearing period Notice of dishonour must be given to the drawer and endorsers promptly Application method: No application required — governs all relevant commercial transactions automatically.
Important Terms
Issuing a dud cheque (a cheque knowing there are insufficient funds) is a criminal offence A holder in due course takes a bill free of defects in title of prior parties An endorsed bill transfers to the endorsee the endorser's rights and title
Official Resources
Website: https://www.cbn.gov.ng Contact: Central Bank of Nigeria (CBN) / Federal Ministry of Justice
Legal Framework
Enacted under the legislative powers of the National Assembly as the Bills of Exchange Act (Cap B8 LFN 2004), which codifies commercial practice based on the English Bills of Exchange Act 1882. Operates alongside the Central Bank of Nigeria Act 2007, the Banks and Other Financial Institutions Act (BOFIA) 2020, and the Bankers' Books Evidence Act. Aligns with the UNCITRAL Model Law on International Credit Transfers and customary international commercial law.