After studying this chapter you will be able to understand: features of a cheque, types of cheques, bearer cheque, order cheque, anted – dated cheque, stale chequ, mutilated cheque, post-dated cheque,...
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6 Signature of the drawer
7 Routing / account number 8 Fractional routing number
A cheque Is generally valid indefinitely or for six months after the date of issue unless
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‘Features ofa
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Features of a Cheque
* Some important features of a cheque are given below;
1 ACheque must be In writing and duly Signed by the drawer
2 It contains an unconditional order
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Types of cheques
- Acheque used to pay wages due Is referref to as a payroll cheque
- Atraveller’s cheque Is designed to allow the person signing It to make an
unconditional payment to someone else as a result of paying the account holder for that privilege These cheques can usually
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Types of a Cheque
- Acheque issued by a bank on Its own account for a customer for payment toa third party is called a Cashier’s cheque A Treasure’s cheque, a Bank cheque, ora
Bank draft
- Acheque issued by a bank, but drawn on
an account with another bank, Is a teller’s
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Open Cheque:
- Acheque Is called ‘open’ when it Is
possible to get cash over the counter at the bank The holder of an open cheque can do the following;
- Receive its payment over the counter at the bank
- Deposit the cheque In the bearer’s
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Crossed Cheque:
- The risk from an open cheque can be avoided by issuing a crossed cheque - The payment of such a cheque Is not
made over the counter at the bank It is only credited to the bank account of the payee
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Crossed Cheque:
Crossing is made by drawing two parallel transverse lines across the face of the
cheque with or without writing ‘Account
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Bearer Cheque
- A bearer cheque Is payable to any person who presents It for payment at the bank
counter It can be transferred by mere delivery and requires no endorsement - Acash cheque or a bearer cheque ora
self cheque does not bear the name of the payee
* It simply states that payable to ‘bearer’ or
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Order cheque
- An order cheque Is a cheque that Is payable to a particular person
* In such a cheque, the word ‘bearer’ may be cut out or cancelled and the word
‘order’ may be written
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Ante -— dated Cheque
- This is a cheque in which the drawer mentions the date earlier to the date of presenting It for payment
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Stale Cheque
* Acheque which Is issued today must be presented at bank for payment within a Stipulated period
- Ajter expiry of that period, no payment will be made and It is then called a stale
cheque
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Mutilated Cheque
- In case a cheque Is torn into two or more pieces and presented for payment, such a cheque Is called mutilated cheque
* The bank will not make payment against such a cheque without getting confirmation of the drawer
- The bank may make payment against
such a cheque if Its is torn at the corners
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Post-dated cheque
* This is a cheque on which the drawer mentions a date which is subsequent to the date on which it is presented
- For example, if a cheque presented on May 8, 2007 bears a date of May 25, 2007, it is a post-dated cheque
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Valid Acceptance:
- The essential requirements of a valid acceptance are that It;
1 Must be written 2 Must be signed
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Holder in Due Course
Holder in due course means any person who for consideration becomes the
possessor of a promissory note, Dill of
exchange or cheque payable to bearer or the payee or endorser thereof if payable to order, before the amount mentioned therein
becomes payable and without sufficient
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Holder in Due Course
The definition specifies that:
The holder has to possess the instrument In due course and before the date of
maturity
2 The consideration must be legal and adequate
3 There should be sufficient cause to
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Holder in Due Course
4 The holder should not become the holder in due course even if he received the
Instrument without any suspicion or knowledge about such defects
5 Notice of any defect in the title
Subsequent to the date of acquisition should not affect the rights of the holder in due
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- Banker and
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The Banker
- The role of a banker is one filled with
multiple duties and responsibilities
- There are different types of bankers and each one Is unique In his own way
- Some of these individuals work for large corporate conglomerates while others
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The Banker
- Each banker has his own set agenda In his role as a banker
* A banker Is an individual (or an institution) who advises his clients with regard to
financial matter
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- The Banker
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The Customer
* In banking, a customer is Someone who
makes use of or receive the services of the bank
- The word customer historically derives ‘custom’ meaning habbit, so a customer was someone who frequented a particular shop, who made it a habbit to purchase
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Duties of a Customer
All banks carry out the customer’s
instructions in a business-like manner
In return, the customer has special duties of cooperation and other duties of care
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- Duties of a Customer 4 Use of forms
5 Express notification of any special Instruction