CHEQUES ACT 1986

This compilation was prepared on 27 September 2007
taking into account amendments up to Act No. 154 of 2007

The text of any of those amendments not in force
on that date is appended in the Notes section

The operation of amendments that have been incorporated may be affected by application provisions that are set out in the Notes section

Prepared by the Office of Legislative Drafting and Publishing,
Attorney‑General's Department, Canberra

Contents

Part I--Preliminary 1

1............ Short title [see Note 1] ....................................................................... 1

2............ Commencement [see Note 1] .............................................................. 1

3............ Interpretation ...................................................................................... 1

4............ Application of rules in bankruptcy, laws of States and Territories and rules of the common law 3

5............ Cheques a financial institution draws on itself ................................... 4

6............ Certain rights, duties and liabilities under Act may be altered by agreement 4

7............ Application of Act ............................................................................. 4

8............ Extension of Act to external Territories ............................................. 5

9............ Act to bind Crown .............................................................................. 5

Part II--Cheques 6

Division 1--Form 6

10.......... Cheque defined ................................................................................... 6

11.......... Order to pay ....................................................................................... 6

12.......... Unconditional order to pay ................................................................ 6

13.......... Order addressed to a financial institution ........................................... 7

14.......... Order to pay on demand ..................................................................... 7

15.......... Order to pay a sum certain ................................................................. 7

16.......... Date of cheque etc. ............................................................................. 8

17.......... Optional stipulations .......................................................................... 8

18.......... Inchoate instruments .......................................................................... 9

Division 2--Order and bearer cheques 10

19.......... Meaning of specification of person in cheque as payee or indorsee 10

20.......... Cheques either payable to order or to bearer .................................... 10

21.......... Cheques payable to order ................................................................. 10

22.......... Cheques payable to bearer ................................................................ 10

23.......... Conversion of cheque payable to bearer into cheque payable to order 10

24.......... Cheques payable to order of specified person ................................. 11

Division 3--Delivery 12

25.......... Delivery essential for drawing or indorsement ................................. 12

26.......... Requisites for effective delivery ....................................................... 12

27.......... Drawing or indorsement may be shown to be ineffective ................ 12

28.......... Presumption of effective delivery .................................................... 12

29.......... Delivery of cheque payable to bearer ............................................... 13

Division 4--Capacity 14

30.......... Capacity to incur liability on cheque ................................................ 14

Division 5--Signature 15

31.......... Signature essential to liability on cheque .......................................... 15

32.......... Unauthorised signature ..................................................................... 15

33.......... Person signing as agent or in representative capacity ....................... 16

34.......... Procuration signature ........................................................................ 17

Division 6--Consideration 18

35.......... Valuable consideration defined ......................................................... 18

36.......... Presumption of value ........................................................................ 18

37.......... Holder taking cheque for which value has been given ....................... 18

38.......... Holder having lien ............................................................................. 18

Part III--Negotiability of cheques 19

Division 1--Transfer by negotiation 19

39.......... Every cheque transferable by negotiation ......................................... 19

40.......... Transfer of cheque by negotiation .................................................... 19

41.......... Requisites for indorsement ............................................................... 19

42.......... Transfer of order cheque without indorsement ................................ 20

43.......... Indorsement of order cheque payable jointly to 2 or more persons . 20

44.......... Indorsement where payee or indorsee misdescribed ........................ 20

45.......... Conditional indorsement ................................................................... 21

46.......... Transfer of stale or dishonoured cheque by negotiation ................... 21

47.......... Transfer by negotiation back to drawer or indorser ......................... 22

48.......... Order of indorsements ...................................................................... 22

49.......... Rights acquired by transfer by negotiation ....................................... 22

Division 2--Holder in due course 24

50.......... Holder in due course defined ............................................................ 24

51.......... Presumption that holder is holder in due course .............................. 24

52.......... Holder deriving title through holder in due course ............................ 25

Division 3--Crossings 26

53.......... Crossing and crossed cheque defined ................................................ 26

54.......... Effect of crossing on payment of cheque ......................................... 26

55.......... Effect of taking cheque crossed not negotiable ................................. 26

56.......... Persons who may add crossing to cheque ........................................ 26

57.......... Multiple crossings ............................................................................ 27

Part IV--Presentment and dishonour 28

Division 1--Presentment 28

58.......... Drawer and indorsers of cheque not liable unless cheque presented 28

59.......... When presentment dispensed with .................................................. 28

60.......... Effect of failure to present within reasonable time ........................... 28

61.......... Due presentment defined .................................................................. 29

61A....... Presentment by financial institution ................................................. 30

62.......... External presentment by financial institution ................................... 30

62A....... Internal presentment by drawee institution ..................................... 33

63.......... Presentment by person other than financial institution ................... 35

64.......... Proper place ...................................................................................... 35

65.......... External presentment of cheques by financial institutions--designated places and designated exhibition places 36

65A....... Internal presentment of cheques by financial institutions--notified places 37

66.......... Deposit institution to present cheques promptly ............................ 38

67.......... Drawee institution to pay or dishonour promptly .......................... 40

68.......... How paid cheque to be dealt with .................................................... 41

Division 2--Dishonour 45

69.......... Dishonour defined ............................................................................ 45

70.......... Drawer and indorsers of cheque liable whether or not given notice of dishonour 45

Division 3--Turnback of cheques drawn on failed financial institutions 46

70A....... Certain cheques taken to be dishonoured ......................................... 46

70B....... Consequences of cheque being taken to be dishonoured .................. 47

Part V--Liabilities on cheques 48

Division 1--Liabilities of parties 48

71.......... Liability of drawer ............................................................................ 48

72.......... Estoppel against drawer ................................................................... 48

73.......... Liability of indorser .......................................................................... 48

74.......... Estoppels against indorser ................................................................ 49

75.......... Stranger signing cheque liable as indorser ......................................... 49

76.......... Measure of damages on dishonour ................................................... 50

77.......... Transferor by delivery ...................................................................... 50

Division 2--Discharge of liabilities of parties 52

78.......... When cheque discharged ................................................................... 52

79.......... Payment in due course ...................................................................... 52

80.......... Renunciation of rights against drawer or all persons liable on cheque 52

81.......... Cancellation of cheque or drawer's signature ................................... 52

82.......... Effect of discharge of cheque ............................................................ 53

83.......... When indorser discharged ................................................................. 54

84.......... Renunciation of rights against indorser ............................................. 54

85.......... Cancellation of indorser's signature .................................................. 54

86.......... Effect of discharge of indorser .......................................................... 54

87.......... Effect of payment by drawer or indorser ......................................... 55

Part VI--Duties and liabilities of financial institutions 56

Division 1--The drawee institution 56

88.......... Cheque not assignment of funds ....................................................... 56

89.......... Stale cheque ...................................................................................... 56

90.......... Countermand of payment and notice of death or mental incapacity 56

91.......... Protection of drawee institution paying improperly raised cheque . 57

92.......... Protection of drawee institution paying crossed cheque in accordance with crossing 57

93.......... Payment of crossed cheque otherwise than in accordance with crossing 57

94.......... Protection of drawee institution paying cheque lacking indorsement or with irregular or unauthorised indorsement .......................................................................................................... 58

Division 2--The collecting institution 60

95.......... Protection of institution collecting cheque for customer or another institution 60

96.......... Rights of institution collecting order cheque not indorsed by payee 61

Part VII--Special provisions relating to FCA institutions and agency cheques 62

Division 1--Presentment and collection of cheques by FCA institutions 62

97.......... FCA institution to ensure cheques presented promptly .................. 62

98.......... Protection of FCA financial institution collecting cheque for customer 63

99.......... Rights of FCA financial institution collecting order cheque not indorsed by payee 64

Division 2--Agency cheques 65

100........ Agency cheques ................................................................................ 65

100A..... Unauthorised signature ..................................................................... 66

Part IX--Miscellaneous 67

113........ Payment of unindorsed order cheque as evidence of receipt by payee 67

114........ Signature ........................................................................................... 67

115........ Replacement of lost or destroyed cheque ......................................... 67

116........ Action on lost or destroyed cheque .................................................. 70

117........ Conflict of laws ................................................................................ 70

118........ Dividend warrants ............................................................................ 72

119........ Regulations ....................................................................................... 72

Notes 73

An Act relating to cheques and certain other negotiable instruments

Notes to the Cheques Act 1986

Note 1

The Cheques Act 1986 as shown in this compilation comprises Act No. 145, 1986 amended as indicated in the Tables below.

For application, saving or transitional provisions made by the Corporations (Repeals, Consequentials and Transitionals) Act 2001, see Act No. 55, 2001.

All relevant information pertaining to application, saving or transitional provisions prior to 29 June 1998 is not included in this compilation. For subsequent information see Table A.

Table of Acts

Act	Number and year	Date of Assent	Date of commencement	Application, saving or transitional provisions
Cheques and Payment Orders Act 1986	145, 1986	11 Dec 1986	1 July 1987 (see Gazette 1987, No. S131)
Proceeds of Crime (Miscellaneous Amendments) Act 1987	73, 1987	5 June 1987	5 June 1987 (see s. 2)	--
Statute Law (Miscellaneous Provisions) Act 1987	141, 1987	18 Dec 1987	S. 3: Royal Assent (a)	S. 5(1)
Law and Justice Legislation Amendment Act 1994	84, 1994	23 June 1994	Part 4 (ss. 9-34): 16 Dec 1994 (see Gazette 1994, No. S435) (b)	Ss. 10, 21-23, 33 and 34
Statute Law Revision Act 1996	43, 1996	25 Oct 1996	Schedule 2 (item 22): (c)	--
Financial Sector Reform (Consequential Amendments) Act 1998	48, 1998	29 June 1998	Schedule 1 (item 26): 1 July 1998 ( see Gazette 1998, No. S316) (d)	--
Cheques and Payment Orders Amendment Act 1998	76, 1998	2 July 1998	Schedule 1 (items 1-26, 28-69, 83-133), Schedules 2 and 3: 1 Dec 1998 (see Gazette, 1998, S371) Schedule 1 (items 27, 70-78, 81, 82): 1 Dec 1998 Remainder: Royal Assent	Sch 1 (items 131-133) and Sch. 2 (items 6, 11, 31) [see Table A]
Cheques and Payment Orders Amendment (Turnback of Cheques) Act 1998	77, 1998	2 July 1998	Schedule 1 (items 1-5, 7, 8): 22 July 1998 (see Gazette 1998, No. S365) Schedule 1 (item 6): (e) Remainder: Royal Assent	--
Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999	44, 1999	17 June 1999	Schedule 7 (items 5-14): 1 July 1999 ( see Gazette 1999, No. S283) (f)	Sch. 8 (items 22, 23) [see Table A]
Corporations (Repeals, Consequentials and Transitionals) Act 2001	55, 2001	28 June 2001	Ss. 4-14 and Schedule 3 (item 97): 15 July 2001 (see Gazette 2001, No. S285) (g)	Ss. 4-14 [see Note 1]
Financial Sector (Collection of Data--Consequential and Transitional Provisions) Act 2001	121, 2001	24 Sept 2001	Ss. 1-3: Royal Assent Remainder: 1 July 2002 (see s. 2(2) and Gazette 2002, No. GN24)	--
Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007	154, 2007	24 Sept 2007	Schedule 4 (items 10, 11): Royal Assent	Sch. 4 (item 11) [see Table A]

Table of Amendments

ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected	How affected
Part I
S. 1......................................	am. No. 76, 1998
S. 3......................................	am. Nos. 48 and 76, 1998; No. 44, 1999; No. 121, 2001
S. 4......................................	am. No. 76, 1998
S. 5......................................	am. No. 84, 1994
	rs. No. 76, 1998
S. 6......................................	am. No. 84, 1994
Part II
Division 1
S. 10....................................	am. No. 76, 1998
S. 12....................................	am. No. 76, 1998
Heading to s. 13..................	am. No. 76, 1998
S. 13....................................	am. No. 76, 1998
S. 17....................................	am. No. 76, 1998
Division 2
Ss. 21-23............................	am. No. 76, 1998
Division 5
S. 32....................................	am. No. 141, 1987
Part III
Division 1
Ss. 43, 44............................	am. No. 76, 1998
S. 49....................................	am. No. 76, 1998
Division 3
S. 54....................................	am. No. 76, 1998
Part IV
Division 1
S. 59....................................	am. Nos. 76 and 77, 1998
S. 60....................................	am. No. 76, 1998
S. 61....................................	am. No. 84, 1994; No. 76, 1998
Heading to s. 61A...............	am. No. 76, 1998
S. 61A.................................	ad. No. 84, 1994
	am. No. 76, 1998
S. 62....................................	am. No. 84, 1994; No. 76, 1998
Heading to s. 62A...............	am. No. 76, 1998
S. 62A.................................	ad. No. 84, 1994
	am. No. 76, 1998
Note to s. 62A(4)................	rep. No. 76, 1998
Notes 1, 2 to s. 62A(4).......	ad. No. 76, 1998
Heading to s. 63..................	am. No. 76, 1998
S. 63....................................	am. No. 76, 1998
S. 64....................................	am. No. 76, 1998
Heading to s. 65..................	am. No. 76, 1998
S. 65....................................	am. No. 84, 1994; No. 76, 1998
Heading to s. 65A...............	am. No. 76, 1998
S. 65A.................................	ad. No. 84, 1994
	am. No. 76, 1998
Heading to s. 66..................	am. No. 76, 1998
S. 66....................................	am. No. 84, 1994; Nos. 76 and 77, 1998
Heading to s. 67..................	am. No. 76, 1998
S. 67....................................	am. No. 84, 1994; No. 76, 1998
S. 68....................................	am. No. 73, 1987; No. 43, 1996; No. 76, 1998; No. 44, 1999
Division 2
S. 69....................................	am. No. 76, 1998
Note to s. 69........................	ad. No. 77, 1998
Division 3
Heading to Div. 3 of Part IV.	rs. No. 76, 1998
Div. 3 of Part IV...................	ad. No. 77, 1998
S. 70A.................................	ad. No. 77, 1998
	am. Nos. 76 and 77, 1998; No. 55, 2001; No. 154, 2007
S. 70B.................................	ad. No. 77, 1998
	am. No. 76, 1998
Part V
Division 1
S. 71....................................	am. No. 77, 1998
S. 73....................................	am. No. 77, 1998
Division 2
S. 78....................................	am. No. 76, 1998
S. 87....................................	am. No. 76, 1998
Part VI
Heading to Part VI...............	rs. No. 76, 1998
Division 1
Heading to Div. 1 of Part VI.	rs. No. 76, 1998
Ss. 88-90............................	am. No. 76, 1998
Heading to s. 91..................	am. No. 76, 1998
S. 91....................................	am. No. 76, 1998
S. 92....................................	rs. No. 76, 1998
S. 93....................................	am. No. 76, 1998
Heading to s. 94..................	am. No. 76, 1998
S. 94....................................	am. No. 76, 1998
Division 2
Heading to Div. 2 of Part VI.	rs. No. 76, 1998
Heading to s. 95..................	am. No. 76, 1998
S. 95....................................	am. No. 141, 1987; No. 76, 1998
Heading to s. 96..................	am. No. 76, 1998
S. 96....................................	am. No. 76, 1998
Part VII
Heading to Part VII...............	rs. No. 76, 1998; No. 44, 1999
Division 1
Heading to Div. 1 of Part VII	rs. No. 76, 1998
Heading to s. 97..................	am. No. 76, 1998
S. 97....................................	am. Nos. 76 and 77, 1998
Heading to s. 98..................	am. No. 76, 1998
S. 98....................................	am. No. 76, 1998
Heading to s. 99..................	am. No. 76, 1998
S. 99....................................	am. No. 76, 1998
Division 2
S. 100..................................	am. No. 76, 1998; No. 44, 1999
S. 100A...............................	ad. No. 76, 1998
Part VIII................................	rep. No. 76, 1998
Ss. 101-104........................	rep. No. 76, 1998
S. 105..................................	am. No. 84, 1994
	rep. No. 76, 1998
S. 105A...............................	ad. No. 84, 1994
	rep. No. 76, 1998
S. 106..................................	am. No. 84, 1994
	rep. No. 76, 1998
S. 106A...............................	ad. No. 84, 1994
	rep. No. 76, 1998
Ss. 107, 108........................	rep. No. 76, 1998
S. 109..................................	am. No. 84, 1994
	rep. No. 76, 1998
S. 109A...............................	ad. No. 84, 1994
	rep. No. 76, 1998
S. 110..................................	am. No. 141, 1987; No. 84, 1994
	rep. No. 76, 1998
S. 111..................................	am. No. 84, 1994
	rep. No. 76, 1998
S. 112..................................	am. No. 73, 1987
	rep. No. 76, 1998
Part IX
S. 113..................................	am. No. 76, 1998
S. 114..................................	rs. No. 76, 1998
	am. No. 44, 1999
S. 115..................................	am. No. 141, 1987
S. 117..................................	am. No. 76, 1998
Schedule.............................	am. No. 141, 1987; No. 84, 1994
	rep. No. 76, 1998

Table A

Application, saving or transitional provisions

Cheques and Payment Orders Amendment Act 1998 (No. 76, 1998)

Schedule 1

131 Definitions

In this Part:

amended Act means the Cheques Act 1986 as in force after the commencement of this Part.

non‑bank financial institution has the same meaning as in the old Act.

old Act means the Cheques and Payment Orders Act 1986 as in force immediately before the commencement of this Part.

132 Old Act continues to apply to certain payment orders

The old Act, as modified by the Schedule to that Act, continues to apply to:

(a) payment orders completed before the commencement of this Part; and

(b) payment orders completed partly before and partly after the commencement of this Part; and

(c) payment orders completed after the commencement of this Part using forms issued to customers of non‑bank financial institutions before that commencement.

133 Preservation of regulations prescribing institutions

Regulations in force immediately before the commencement of this Part for the purposes of paragraph (b) of the definition of non‑bank financial institution in subsection 3(1) of the old Act have effect, after that commencement, as if they were regulations for the purposes of paragraph (b) of the definition of FCA institution in subsection 3(1) of the amended Act.

Schedule 2

6 Cheques already converted under subsection 23(1) continue to be cheques payable to order

A cheque that, on the commencement of item 5, was a cheque payable to order as a result of a conversion under the subsection repealed by that item continues to be a cheque payable to order after that commencement despite the repeal of that subsection.

11 Application of amendment made by item 10

The amendment made by item 10 applies to cheques that are issued after the commencement of that item.

31 Amendments of section 89 apply to cheques that become stale after amendments commence

The amendments made by items 28, 29 and 30 apply to cheques that become stale after the commencement of those items.

Financial Sector Reform (Amendments and Transitional Provisions) Act (No. 1) 1999 (No. 44, 1999)

Schedule 8

22 Regulations may deal with transitional, saving or application matters

(1) The regulations may deal with matters of a transitional, saving or application nature relating to:

(a) the transition from the application of provisions of the replaced legislation to the application of provisions of the Banking Act 1959, the Life Insurance Act 1995, the Financial Sector (Transfers of Business) Act 1999, the Financial Sector (Shareholdings) Act 1998 or the Australian Prudential Regulation Authority Act 1998; or

(b) the transition, for The Cairns Cooperative Weekly Penny Savings Bank Limited, from the application of provisions of the Financial Intermediaries Act 1996 of Queensland to the application of provisions of any of the Acts referred to in paragraph (a); or

(2) Without limiting subitem (1), the regulations may provide for a matter to be dealt with, wholly or partly, in any of the following ways:

(a) by applying (with or without modifications) to the matter:

(i) provisions of a law of the Commonwealth, or of a State or Territory; or

(ii) provisions of a repealed or amended law of the Commonwealth, or of a State or Territory, in the form that those provisions took before the repeal or amendment; or

(iii) a combination of provisions referred to in subparagraphs (i) and (ii);

(b) by otherwise specifying rules for dealing with the matter;

(c) by specifying a particular consequence of the matter, or of an outcome of the matter, for the purposes of a law of the Commonwealth.

(3) Without limiting subitems (1) and (2), the regulations may provide for the continued effect, for the purposes of a provision of a law of the Commonwealth, of a thing done or instrument made, or a class of things done or instruments made, before the transfer date under or for the purposes of a provision of a law of a State or Territory. In the case of an instrument or class of instruments, the regulations may provide for the instrument or instruments to continue to have effect subject to modifications.

(4) Without limiting subitem (3), regulations providing for the continued effect of things done or instruments made may permit all or any of the following matters to be determined in writing by a specified person, or by a person included in a specified class of persons:

(a) the identification of a thing done or instrument made, or a class of things done or instruments made, that is to continue to have effect;

(b) the purpose for which a thing done or instrument made, or a class of things done or instruments made, is to continue to have effect;

(c) any modifications subject to which an instrument made, or a class of instruments made, is to continue to have effect.

(5) Despite subsection 48(2) of the Acts Interpretation Act 1901, regulations for the purposes of this item:

(a) may be expressed to take effect from a date before the regulations are notified in the Gazette; and

(b) may provide for a determination of a kind referred to in subitem (4) to take effect from a date before the determination is made (including a date before the regulations are notified in the Gazette).

(6) In this item, a reference to a law, whether of the Commonwealth or of a State or Territory, includes a reference to an instrument made under such a law.

(7) In this item:

replaced legislation means:

(a) the AFIC Codes; and

(b) the Financial Institutions Codes; and

(d) the Australian Financial Institutions Commission Act 1992 of Queensland, and any Act of another State or of a Territory that provides for the application, as a law of the State or Territory, of the Code set out in section 21 of the Australian Financial Institutions Commission Act 1992 of Queensland; and

(e) the Financial Institutions (Queensland) Act 1992 of Queensland, and any Act of another State or of a Territory that provides for the application, as a law of the State or Territory, of the Code set out in section 30 of the Financial Institutions (Queensland) Act 1992 of Queensland; and

(f) the Friendly Societies (Victoria) Act 1996 of Victoria, and any Act of another State or of a Territory that provides for the application, as a law of the State or Territory, of the Code set out in the Schedule to the Friendly Societies (Victoria) Act 1996 of Victoria; and

(g) the Friendly Societies (Western Australia) Act 1999; and

(h) any other law of a State or Territory prescribed by the regulations for the purposes of this definition.

23 Power to make regulations

The Governor‑General may make regulations, not inconsistent with this Act, prescribing matters required or permitted by this Act to be prescribed.

Financial Sector Legislation Amendment (Simplifying Regulation and Review) Act 2007 (No. 154, 2007)

Schedule 4

11 Saving provision

Instruments in force under subsection 70A(4) of the Cheques Act 1986 immediately before the commencement of item 10 continue in force, on and after that commencement, according to their terms and subject to the Legislative Instruments Act 2003, as if they had been made under that provision of the Cheques Act 1986 as amended by this Act.

Commonwealth Consolidated Acts

CHEQUES ACT 1986 - NOTES