Bill C-90

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	2nd Session, 35th Parliament, 45-46 Elizabeth II, 1996-97
	The House of Commons of Canada
	BILL C-90
	An Act respecting depository bills and notes and making a related amendment to another Act
	Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:
	SHORT TITLE
Short title	1. This Act may be cited as the Depository Bills and Notes Act.
	INTERPRETATION
Definitions	2. (1) The definitions in this subsection apply in this Act.
``acceptor'' « accepteur »	``acceptor'' means the person to whom a depository bill is addressed and who signs it.
``clearing house'' « chambre de compensa- tion »	``clearing house'' means a corporation, association, partnership, agency or other entity that carries on the business of providing its participants with the clearing and settlement of trades in securities, as defined in subsection 48(2) of the Canada Business Corporations Act, that are deposited with it.
``depository bill'' « lettre de dépôt »	``depository bill'' means an order described in section 4.
``depository note'' « billet de dépôt »	``depository note'' means a promise described in section 5.
``drawer'' « tireur »	``drawer'' means the person who addresses a depository bill.
``endorser'' « endosseur »	``endorser'' means a person who, in the case of a depository bill, signs the depository bill otherwise than as drawer or acceptor, or, in the case of a depository note, signs the depository note otherwise than as maker.
``issue'' « émission »	``issue'' means the first delivery of a depository bill or note, complete in form, to the person to whom it is payable.
``maker'' « souscripteur »	``maker'' means the person who makes a depository note.
``participant'' « établisseme nt participant »	``participant'' means a member of a clearing house.
``party'' « partie »	``party'' means a person who signs a depository bill or note.
``person'' « personne »	``person'' means a natural person or a corporation, a trust, a partnership, a fund, an unincorporated association or organization, Her Majesty in right of Canada or of a province, or the government of a foreign country or any political subdivision of a foreign country.
``transaction'' « opération »	``transaction'' means a transfer, pledge, assignment or hypothecation of a depository bill or note or of an interest in a depository bill or note.
Deposit of depository bill or note	(2) For the purposes of this Act, a depository bill or note is deposited with a clearing house if it is accepted for deposit by the clearing house to which it is payable and is in the possession of that clearing house or, subject to the instructions of the clearing house, in the possession of the clearing house's custodian, or a nominee of either of them.
Payable to clearing house	(3) For the purposes of this Act, a depository bill or note is payable to a clearing house if it is made payable to the clearing house or its nominee, originally or by endorsement.
	HER MAJESTY
Binding on Her Majesty	3. This Act is binding on Her Majesty in right of Canada or a province.
	DEPOSITORY BILLS AND NOTES
Depository bill	4. A depository bill is an unconditional order in writing that is
	(a) addressed by one person to another and signed by the person giving it, requiring the person to whom it is addressed to pay, at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person;
	(b) accepted unconditionally by the signature of the person to whom it is addressed;
	(c) marked prominently and legibly on its face and within its text, at or before the time of issue, with the words ``This is a depository bill subject to the Depository Bills and Notes Act'' or ``Lettre de dépôt assujettie à la Loi sur les lettres et billets de dépôt'';
	(d) not marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it;
	(e) made payable, originally or by endorsement, to a clearing house; and
	(f) deposited with the clearing house to which it is made payable.
Depository note	5. A depository note is an unconditional promise in writing that is
	(a) made by one person to another and signed by the maker, promising to pay, at a fixed or determinable future time, a sum certain in money to, or to the order of, a specified person;
	(b) marked prominently and legibly on its face and within its text, at or before the time of issue, with the words ``This is a depository note subject to the Depository Bills and Notes Act'' or ``Billet de dépôt assujetti à la Loi sur les lettres et billets de dépôt'';
	(c) not marked with any words prohibiting negotiation, transfer or assignment of it or of an interest in it;
	(d) made payable, originally or by endorsement, to a clearing house; and
	(e) deposited with the clearing house to which it is made payable.
Non-appli- cation of Bills of Exchange Act	6. The Bills of Exchange Act does not apply in respect of depository bills and notes.
Signature presumed valid	7. In the absence of evidence to the contrary, a signature on a depository bill or note is presumed to be genuine and authorized.
Transactions effected by entries in records of clearing houses	8. (1) A transaction related to a depository bill or note recorded by a clearing house, or related to an interest in such a depository bill or note, may be effected by the making of appropriate entries in the records of the clearing house.
Effect of transactions	(2) The transaction has the same effect as a delivery of a bill of exchange in bearer form under the Bills of Exchange Act and takes effect at the time provided by the law applicable to the transaction.
Possession	(3) A participant in whose favour the transaction is effected is deemed to be in possession of the depository bill or note or, in the case of a transaction related to an interest in a depository bill or note, is deemed to be in possession of a depository bill or note representing the interest.
Fungible depository bills or notes	9. (1) Transactions related to like depository bills or notes, or related to interests in like depository bills or notes, may be recorded by a clearing house as part of a fungible bulk and the entries may refer merely to a quantity of like depository bills or notes.
Entries on net basis	(2) Where there is more than one transaction in fungible depository bills or notes, a clearing house may make entries in respect of those transactions on a net basis.
Errors in records	10. Errors in the records of a clearing house do not affect the validity or effect of the entries or the liabilities or obligations of the clearing house to persons adversely affected by the errors.
	LIABILITIES AND ACTIONS
Liability of acceptor	11. The acceptor of a depository bill is liable to provide the clearing house to which it is payable with funds so that the clearing house can pay the participants having an interest in the depository bill on its due date and in accordance with its terms.
Liability of drawer	12. If a depository bill is dishonoured by the acceptor, the drawer is liable to pay the amount of the depository bill to the clearing house to which it is payable.
Liability of endorser of depository bill	13. If a depository bill is dishonoured by the drawer and acceptor, any endorser is liable to pay the amount of the depository bill to the clearing house to which it is payable.
Liability of maker	14. The maker of a depository note is liable to provide the clearing house to which it is payable with funds so that the clearing house can pay the principal amount of the depository note, and the interest payable by its terms, to the participants having an interest in the depository note on the due date or dates.
Liability of endorser of depository note	15. If a depository note is dishonoured by the maker, any endorser is liable to pay the principal amount of the depository note, and the interest payable by its terms, to the clearing house to which it is payable.
Liability in absence of contract	16. A party is liable to pay in accordance with sections 11 to 15 whether or not the depository bill or note constitutes a binding contractual obligation.
Duty of clearing house	17. (1) A clearing house must enforce the payment of a depository bill or note payable to it and it must do so for the account and benefit and at the expense of each participant having an interest in the depository bill or note.
Action in name of clearing house	(2) If a clearing house does not bring an action to enforce the payment of a depository bill or note within a reasonable time, a participant having an interest in the depository bill or note may bring an action in the name of the clearing house.
No beneficial interest	18. A clearing house has no beneficial interest in a depository bill or note.
No defences	19. (1) A clearing house holds a depository bill or note payable to it, and any money received as payment of principal or interest with respect to the depository bill or note, free from any defence affecting the depository bill or note and free from the liability of any party to it, including a defence
	(a) based on whether the depository bill or note is free of forgery or counterfeiting;
	(b) based on the validity or enforceability of the obligation of a party;
	(c) related to the non-delivery of the depository bill or note by any person; or
	(d) available to the parties among themselves or arising from their dealings with the clearing house or other persons with respect to the depository bill or note.
Participants	(2) Subsection (1) applies to a participant bringing an action in the name of a clearing house to enforce payment of a depository bill or note in accordance with subsection 17(2).
R.S., c. F-11	amendment to financial administration act
	20. *Section 70 of the Financial Adminis tration Act* is replaced by the following:**
Limitation of application of this Part	70. This Part does not apply
	(a) to any negotiable instrument;
	(b) to any Crown debt incurred by or in the name of a corporation set out in Schedule III; or
	(c) to any securities issued under Part IV.

Bill C-90

BILL C-90

SHORT TITLE

INTERPRETATION

HER MAJESTY

DEPOSITORY BILLS AND NOTES

LIABILITIES AND ACTIONS