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VOL. 79 PART 2 MARCH 2021
government department was lost by the customer after having purchased
the draft from the bank. The customer wanted the bank to provide a
replacement draft, arguing that there was no real risk to the bank, but at the
same time, the customer did not want to assume any risk of litigation or loss
if the original item was later found and negotiated. The issuing bank
refused to replace the lost draft without the customer posting adequate
security for the replacement. The court upheld the bank’s position. If
restrictive endorsements had been placed on the draft (either by the customer
or as a bank standard form) as recommended in “Lost and Stolen
Cheques”,31 the problem might have been avoided.
The simple addition to cheques and drafts of a unique QR Code would
largely prevent counterfeit certified cheques and drafts from being
accepted or used more than once.32 Verification of such items could also be
accelerated, though the possibility of presentation of a duplicate would not
be eliminated.
CONCLUSION
Yes, mobile payments, electronic payment processes and more efficient
and secure payment protocols continue to expand their share of the payments.
However, paper-based payment items remain an integral component
of Canada’s payment system. Barring a legislative prohibition on the
use of paper-based payment items, cheques and drafts will likely continue
to fill a niche within payments for years to come. We have already seen that
new technologies such as Remote Deposit Capture have extended the life of
the humble cheque. The question remains whether other payment process
technologies and protocols (whether those suggested herein or others) can
be feasibly introduced and implemented before the last cheque bounces
into history.
ENDNOTES
1. “Lost and Stolen Cheques, Bank Drafts and Trust
Cheques: Some Modest but Partial Solutions” (2009)
67 Advocate 191 “Lost and Stolen Cheques”.
2. In this article, either or both of a cheque or a draft
will be referred to as an “item”. This is the term used
in the Canadian Payments Association Rules for
instruments sent through the clearing system.
3. This account is reproduced from “Lost and Stolen
Cheques”, supra note 1, and is necessarily a summary.
For a broader overview, see Richard Olson,
“Bills of Exchange and Banking Instruments” in Banking
Basics (CLE 2003) or, for a more comprehensive
discussion, see Bradley Crawford, Payment, Clearing
and Settlement in Canada (Aurora, Ont: Canada
Law Book, 2002) and Benjamin Geva, “The Autonomy
of the Banker’s Obligation on Bank Drafts and
Certified Cheques” (1994) 73:1 Can Bar Rev 21.
4. A “bank” is defined in the Bills of Exchange Act, RSC
1985, c B-4, s 2 BEA as a member of the Canadian
Payments Association and includes almost all banks,
trust companies and credit unions in Canada. We
use the term “bank” in this article to include all of the
foregoing institutions. Note that “cheques” drawn on
banks outside of Canada are not “cheques” under
the BEA; rather, they are “foreign bills”: see BEA,
s 24(2).
5. BEA, supra note 4.
6. Ibid, s 25.
7. Centrac Inc v Canadian Imperial Bank of Commerce
(1994), 20 OR (3d) 105 (Gen Div), aff’d (1994), 21
OR (3d) 161 (CA); AE LePage Investments Ltd v Rattray
Publications Ltd (1994), 21 OR (3d) 164 (CA);
Enokhok Development Corporation Ltd v Alberta
Treasury Branches, 2011 ABCA 322.