Date of Decision: Tikimt 30, 2013 E.C..

• Applicants: 1st Applicant: Sabieh General Construction PLC; 2nd Applicant: W/ro Abnet Abera.
• Respondent: Ato Yared Mamo.

Interpretation of Law:

The Court reaffirmed that a check is a negotiable instrument representing an unconditional order to pay, and its payment generally cannot be stopped or suspended except in specific circumstances defined by law. However, pursuant to Article 717(1) of the Commercial Code, an issuer may raise "personal defenses" against a holder if there is a direct contractual or personal relationship between them. In such instances, the check's enforcement must be viewed in conjunction with the underlying contract that necessitated its issuance.

Reasoning:

The applicants argued that the check was issued as security for a machinery rental contract, not as a final pre-payment, and that the actual debt should be calculated based on daily time-logs, minus withholding taxes, wages, and repair costs. The Cassation Bench reasoned that since the parties had a direct personal relationship, the lower court correctly examined the underlying rental agreement and the evidence regarding the actual services rendered. The court found that the determination of the specific debt amount (77,659.07 ETB) was a matter of fact-finding and evidence weighing, which does not constitute a "fundamental error of law".

Ruling:

The decisions of the Federal First Instance Court and the Federal High Court were affirmed. Each party was ordered to bear their own costs for the cassation proceedings.

Cited Provisions:

• Commercial Code: Articles 640, 717(1), 827(a), 854, and 868.
• FDRE Constitution: Article 80(3)(a).
• Proclamation No. 25/88: Article 10.

Cited Cassation Decisions:

The Court cited Cassation File No. 24435 (published in Volume 12) as a precedent for the interpretation of personal defenses in negotiable instruments.