BANKING OPERATION 5D ❤
Countermand of cheque
Negotiable Instruments
Definition
A bill or any instrument is negotiable when it is transferred from one person to another person in such manner as to constitute the transfree the holder of the bill or instrument.
Characteristic
✅ Transferable from one person to another with or without endorement
✅The holder can sue in his own name
✅The transferee who takes it in good faith
✅No notice is needed to be given to the debtor or issuer
BOE
Parties involved
(Oct16)
👤Drawer
(the person who issue the bill)
👤Drawee
(the bank that is paying the bill when it is due or matured
👤Payee
(the bearer of the bill)
Types
🏴 Local Bill
(Bill drawn and payable in Malaysia)
🏴Foreign Bill
(Outside Malaysia)
Endorsement
Types of endorsement
(March14/Sept14/Jan18)
🔒Blank endorsement
🔒Special endorsement
🔒Restrictive endorsement
Types of Holder
(Jan18)
⭐Holder of a bill
⭐Holder for value
⭐Holder in due course
Dishonuor of bill
✏Dishonour by non-acceptance
✏Dishonour by non-payment
Protection for the cheque
(March17/Sept14)
Cheque
Parties involved
👤Drawer
(issue the cheque)
👤Drawee
(also known as Paying bank)
👤Payee
(drawer and drawee)
Differences between BOE & Cheque
(Oct16/March14/Sept15)
💥BOE
1.Can be drawn upon any person
2.Can be made payable at a fixed or determinable future
3.BOE cannot be crossed
4.Require to be endorsed by the payee
5.The acceptor/drawee is primarily liable to the holder
💥CHEQUE
1.Must be drawn upon a banker only
2.Payable on demand
3.The cheque may be crossed
4.Acheque need not to be endorsed by payee
5.The drawer the party primarily liable if the cheque is rejected
Factor can be considered
(March17)
🚩The cheque must be an unconditional order. Cannot be changed
🚩Must be in writing
🚩Must be signed
🚩Cheque must be stated in words tally with that in figures to meet the criteria 'a sum certain in money"
🚩A cheque must be dated
Types of Bank Crossing
(March 15/Oct16)
⛔General crossing
⛔Special crossing
Special types of crossing
(March17)
🚫Not negotiable crossing
🚫Account Payee crossing
Types of dates on a cheque
🗓Ante dated
(before date of issue)
🗓Post dated
(later than the date)
🗓Out of date
(>6months)
⚔Statutory protection
(good faith and without negligence)
⚔Defence of Estoppel
(the bank must act assuming that the information was true)
⚔Defence of contributory Negligence
(Mistakes from bank and customer)
⚔Indemnity from customer
(Bank do instruction by customer)
Payment of cheque
Types of liabilities
🏦The bank is liable for damages
🏦The bank wrongfully dishonour a cheque
🏦The bank pays a person not entitled to the cheque
Reasons cancellation of cheque
❌Countermand of payment
❌Notices of the customer's death
The rules
🔵Should be in writing
🔵Written instruction should be delivered to the banker
🔵The instruction given to the bank should be accurate
🔵The instruction is not effective
❤
GROUP MEMBER (LIST NAME OF EACH MEMBER)
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Definition:
A written order instructing a bank to pay someone on demand
-to pay twhen the cheque isnpaid in or a request for cash is made
Bearer bill and order bill
•Bearer bill
-Anyone can cash the bill of exchnage without endorement
-example: “Pay Ali or bearer”. Ali or any oerson even a thief can get the bill and get money
•Order bill
-Have signature from endorsements -“PuAliororder”.alimust signbehindthisbill
click to edit
Advantge of cheque
-More secured than cash
-can be stop of loss
-can easily send (post/email)
Diadvantage
-susceptible to theft and fraud
-May find that is dishonoured/rejected by paying bank
-Take time to clear a cheque
Open/uncrossed cheque
-a cheque without a crossing
-paymeny cash may be made over the counter
Crossed cheque
-The holder will not be able to cash it
-has to be paid into a bank account
Advantage of cross cheque
-more time to stop payment of a cross cheque
Collection of cheque
•Duties of collecting bank to its customer
-to present a cheque for payment
-to contact notice of any dishonour cheque
-to be liable of its customer if a cheque is delay
•Negligence of collecting cheque
-failur to obtain an introducer’sbrederence
-failure to check legalities of thendocument with relevent authorities (exp: business registration /ic)