INDIVIDUAL ASSIGNMENT 4

(NEGOTIABLE INSTRUMENTS QUESTION)

Name : Nurfarahain Binti Hamdan

Student ID : 2014603618
Group : NBH2A
Submission Date : 30th JUNE 2020
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1. Explain the characteristics of cheques under the Bill of Exchange Act 1949.

By virtue of Section 3 (which defines bill of exchange) and Section 2 (which defines banker), the
cheque is necessarily comprises of the following characteristics :
a) It is an unconditional order in writing
- The cheque must be in the form of order and not a request
- The word used must be “Pay” and not “Please Pay”
- Writing includes printing and handwriting
b) It is issued and signed by the drawer
- A cheque will not be valid if it is not signed by the person who is drawing the cheque
- The drawer of the cheque will not be liable unless if he signed the cheques
c) It is drawn on a banker (drawee bank/paying bank)
- When the name of the drawee is printed on the cheque, it is considered as order being
addressed to the banker
d) It orders the drawee / paying banker to pay a sum certain in money on demand
- Demand for payment happened when the cheque is presented to the bank
- According to section 10 of BOEA “on demand” means a bill is payable on demand
which is expressed to be payable on demand, or at sight, or no presentation or in
which no time is expressed
e) It is drawn in favour of a specified person (payee) or to his order or in favour of a bearer
- The cheque must be a payment to a specified person or to a bearer
- According to Section 2 “bearer” means the person in possession of a bill or note which
is payable to the bearer

2. Discuss the following types of crossings :-

i. General crossing
It is where a cheque bears across its face two parallel transverse lines simply, or added in
between those lines with the words “not negotiable” or the words “and company” / “&
Co.” either with or without the words “not negotiable”.

The effects of general crossing are :-

- The paying banker (for example, the drawee bank) can only pay the amount of the
cheque to a collecting banker (the bank which collects payment for its customer).
- The paying banker cannot pay cash the cheque across the counter.
- It is a hindrance for someone who has obtained the cheque wrongfully to obtain
payment.
- It gives the customer of the paying, some time to request the paying bank to stop the
payment.

ii. Special crossing

It is where a cheque bears across its face two parallel transverse lines, added in between
those line a name of a banker, either with or without the words “not negotiable”. The
cheque may also be crossed with the name of a banker without the two parallel transverse
lines. However, the words “not negotiable” may be added to the banker’s name.

The effects of special crossing are :-

- It is safer than the general crossing.
- The paying banker must pay the amount of the cheque only to the collecting banker
named in the crossing.
- The person who wants to obtain payment of the cheque must be a “customer” of the
collecting banker named in the crossing (for example, having an account with that
collecting banker).
- If the cheque going to be negotiated, it can only be negotiated to any person who is a
“customer” of the collecting banker named in the crossing.