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Bills of Exchange. James v. Chedli
In James v. Chedli (Ont CA, 2021) the Court of Appeal considered alteration of a promissory note:[40] Sections 144(1) and (2) of the Bills of Exchange Act address the consequences when there is a material alteration to a bill, including a promissory note. Section 145 sets out five circumstances that constitute material alterations. These sections state:144(1) Subject to subsection (2), where a bill or an acceptance is materially altered without the assent of all parties liable on the bill, the bill is voided, except as against a party who has himself made, authorized or assented to the alteration and subsequent endorsers.
(2) Where a bill has been materially altered, but the alteration is not apparent, and the bill is in the hands of a holder in due course, the holder may avail himself of the bill as if it had not been altered and may enforce payment of it according to its original tenor.
145 In particular, any alteration
(a) of the date,
(b) of the sum payable,
(c) of the time of payment,
(d) of the place of payment,
(e) by the addition of a place of payment without the acceptor’s assent where a bill has been accepted generally,
is a material alteration. [41] These sections make it clear that a note can be altered with the assent of all parties, and the alteration will be binding as between them. However, by making a material alteration without the assent of all the parties to the note, the note becomes void against any party who did not assent to the material alteration: Ian F.G. Baxter, The Law of Banking, 4th ed. (Scarborough: Thomson Canada Limited, 1992), at p. 31. The only issue in this case was whether either Dennis or Anna Chedli had assented to the alteration of the notes. It was accepted that a note could be materially altered by an agreement or a letter. Baxter states, in the context of discussing s. 144 of the Bills of Exchange Act, that “[o]n principle a written agreement can be varied by consent, and even by a later oral agreement”: Baxter, at p. 31, fn. 189.[1] He references Goss v. Nugent (1833), 5 B & Ad. 58, 110 E.R. 713 (Eng. K.B.).
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