Chapter 15

Question 1

Cheque:

Answer 1

Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

Question 2

Crossing of cheques:

Answer 2

-A cheque is said to be crossed when it bears across its face two parallel transverse lines which are usually drawn on the left hand top corner of the cheque.
- Purpose of crossing is to direct the drawee (banker) to pay the amount only to a banker (so that the party who receives the payment can easily be traced)

Question 3

Rules regarding payment of Cheques

Answer 3

§ If cheque is crossed specially to more than 1 banker (except when crossed to an agent for collection), banker to whom it is drawn shall refuse payment

§ If banker, on whom a cross cheque is drawn, makes a payment in due course, paying banker
and drawer positioned as if cheque had been paid to and received by the true owner thereof.

§ If banker, on whom a cross cheque is drawn, makes a payment out of due course, the paying banker shall be liable to true owner of cheque for any loss he may sustain for that payment