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• On section 73 of the Bills of Exchange Act
1949, cheque is defined as ‘a bill of exchange
drawn on a banker payable on demand’


It is an unconditional order in writing 2. It is signed by the drawer 3. It orders the banker to pay a sum certain in money on demand. It is drawn on a banker( drawee) 4. . It is drawn in favour of a specified person(payee) or to his order or in favour of a bearer. 5.A cheque necessarily comprises the following characteristics: 1.

CATEGORIES OF CHEQUES • Undated cheques • Overdue or Stale cheque • Post-dated cheques .

Bankers need not honour undated cheque but it is still valid.UNDATED CHEQUES • Undated check is a cheque that has no date written on it. . a holder of such cheque can fill up with the correct date within a reasonable time and the cheque can be honoured. • Under section 12 & 20 of the Bills and Exchange Act 1949.

OVERDUE OR STALE CHEQUE • Overdue cheque is a cheque that have been circulated for an unreasonable length of time according to Section 36(3) of the Bills of Exchange Act 1949. • Stale cheque is a cheque that have been circulated for a long time. • For Malaysia’s banking practice. a stale cheque is a cheque that is half-years old or more. . usually after its expiry.

that it bears date on a Sunday.POST-DATED • Cheques which bears a date in the future • It is a valid cheque although it is not payable on demand. . It is considered as a valid cheque according to section 13(2). A bill is not invalid by reason only that it is ante-dated or postdated.

• Types of Crossing • • • General crossing Special crossing Limited crossing . • The purpose of crossing cheque is to instruct that payment can only be made through a bank or that it must be paid in a certain manner for example through an account.CROSSING OF CHEQUES • The crossing of cheque is a cheque that has been marked to specify an instruction about the way it is to be redeemed.

GENERAL CROSSING • As stated on the section 76(1) of Bills and Exchange Act 1949. or added in between those lines with i) The word “not negotiable” or ii) The word “and company/& Co.” either with or without the words “not negotiable” . it is where a cheque bears across its face two parallel transverse lines simply.


EFFECTS OF GENERAL CROSSING • The paying banker can only pay the amount of the cheque to a collecting banker • 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 • Gives customer of the paying bank. some time to request the paying bank to stop the payment .

. and the cheque is crossed specially and to that banker. that addition constitutes a crossing.SPECIAL CROSSING • In section 76(2) Where a cheque bears across its face an addition of the name of a banker. either with or without the words ‘not negotiable'.


EFFECT OF SPECIAL CROSSING • 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 .

and Account payee only • On section 81. not negotiable is where a person takes a crossed cheque which bears on it the words “not negotiable” he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had .LIMITED CHEQUE • 2 categories which is Not Negotiable.

. It was held that since the clerk had no title to the cheque. His clerk. inserted a sum in access of her authority and delivered it to P in payment of her own debt. who was supposed to fill the amount and the name of payee. P had no better title to the cheque therefore not liable to it.Wilson and Meeson v Pickering • W drew a cheque in blank crossed not negotiable.

Stated on the act. where a cheque is crossed and bears across its face the words “account payee” or “a/c payee”. either with or without the word “only”. the cheque shall not be transferable. but shall only be valid as between the parties thereto.• Account payee on the other hand is called Non-Transferable cheque in the Bills of Exchange 1949. .

amount or other information. the drawer will be discharged from liabilities. If the cheque has been materially altered without the drawer’s authority. .ALTERATION ON CHEQUES • An alteration on cheque is a change in which the name.



• Apparent effect consist of the liable parties on the cheque before and the time of such alteration will be discharged from liability upon the cheque • However.EFFECTS OF ALTERATIONS • There 2 effects of alterations which is Apparent and Non-Apparent. and subsequent endorses… . authorized or assented to the alteration. the person who made the alteration and all the subsequent parties will be bound by the cheque as it is altered as stated on section 64(1) • …except as against a party who has himself made.

he cannot make use section 64(1) to avoid liability .• Non-Apparent alteration effect gives the holder of cheque to enforce the cheque according to its “original tenor” • Section 64(1) “Provided that where…the alteration is not apparent …holder…may enforce payment of it according to its original tenor” • However. if the alteration is made by the drawer himself or by someone acting under his instruction.

V Ho Hong Bank Ltd. Held: The appeal should be allowed as the manager was negligent in drawing the cheque. Moreover. sued the bank.520.. in filling in the figures he left a space between the $ sign and the figure ‘2’ so that an additional figure. ‘1’ could be inserted. The bank paid out $12.Barbour Ltd. The bank’s defence was that since the cheque was negligently drawn by the manager of Barbour Ltd. .520 into $12. The respondents had to bear the loss..520. [1926] SSLR 116 Facts: The manager of Barbour Ltd drew a cheque for $2. The figure was altered. Barbour Ltd.520 but the word ‘two’ was written in such a way that it could be changed to ‘twelve’. it must bear the loss. thereby changing the sum of $2.

A clerk of the firm misappropriated the cheque and altered the figures to read one hundred and twenty Sterling pounds and wrote in the appropriate words before cashing the cheque at the bank. The partner had neglected to take all precautions. By leaving blank the space where the amount should have been stated. The sum was stated in figures but not in words.London Joint Stock Bank v Macmillan and Arthur [1918] AC 777 • Facts: A partner in a firm drew a cheque for two Sterling pounds payable to bearer. • Held: The bank could debit the firm’s account with the one hundred and twenty pounds. . and also by leaving blank spaces on either side of the figure ‘2’ there was a clear breach of duty which the customer owed to the banker.

Common Questions • • • • How to uncross a cheque? Can changes be made to a cheque? How long does it take for a cheque to clear? Why might a cheque be dishonoured? .