Q&As

Would an uncashed cheque solely in respect of personal injury be considered a ‘thing in action’ in bankruptcy? If so, would the trustee in bankruptcy therefore be obliged to ensure that the money was paid to the bankrupt?

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Produced in partnership with Paul Wright of Selborne Chambers

Published on: 13 September 2022

There are two parts to this Q&A: (i) does a cheque constitute a ‘thing in action’; and (ii) if that cheque is drawn solely in respect of damages for some personal injury suffered by the bankrupt, are the funds required to be paid to the bankrupt?

A cheque is a bill of exchange payable on demand. When a cheque is delivered, it constitutes a ‘thing in action’ which the payee can enforce against the payor (R v Preddy).

As such, where a dispute arises in relation to a contract for the sale of goods or services and where payment is made by cheque, two separate contracts arise: (i) the contract for the provision of goods or services; and (ii) the unconditional promise to pay on the cheque. The payee may, therefore, elect either to sue on the cheque

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Paul Wright

Barrister, Selborne Chambers

Paul Wright is a barrister at Selborne Chambers. Prior to that, he was a member of 9 Stone Buildings for several years, after successful completion of his pupillage in chambers. In addition, Paul previously worked as part of the knowledge management team in the restructuring and insolvency department of Freshfields Bruckhaus Deringer LLP and, during his first year of practice, he was seconded to the restructuring and insolvency Team at Fieldfisher LLP in London.

He specialises in commercial and chancery practice and is a contributing editor of Insolvency Legislation: Annotations & Commentary (Louis Doyle & Professor Andrew Keay (eds)) LexisNexis 7th Edition (ISBN 978-1-7847-3398-8). Paul is also a regular contributor to a number of legal journals, with articles on various aspects of civil and insolvency litigation.