This Act may be cited as the Cheques Act 1960, and shall be read together with and deemed part of the Bills of Exchange Act 1908 (hereinafter referred to as the principal Act).
(2)
This Act shall come into force on the 1st day of January 1961.
2-
Protection of bankers paying unindorsed or irregularly indorsed cheques
(1)
Where a banker in good faith and in the ordinary course of business pays a cheque drawn on him which is not indorsed or is irregularly indorsed, he shall not, in doing so, incur any liability by reason only of the absence of, or irregularity in, indorsement, and he shall be deemed to have paid it in due course.
(2)
Where a banker in good faith and in the ordinary course of business pays any such instrument as the following, namely—
(a)
A document issued by a customer of his which, though not a bill of exchange, is intended to enable a person to obtain payment from him of the sum mentioned in the document; or
(b)
A draft payable on demand drawn by him upon himself whether payable at the head office or some other office of his bank—
he shall not, in doing so, incur any liability by reason only of the absence of, or irregularity in, indorsement, and the payment shall discharge the instrument.
3-
Rights of bankers collecting cheques not indorsed by holders
A banker who gives value for, or has a lien on, a cheque payable to order which the holder delivers to him for collection without indorsing it shall have such rights (if any) as he would have had if, upon delivery, the holder had indorsed it in blank.
An unindorsed cheque which appears to have been paid by a banker on whom it is drawn shall, in the absence of proof to the contrary, be sufficient evidence of the receipt by the payee of the sum payable by the cheque.
5-
Protection of bankers collecting payment of cheques
(1)
Where a banker in good faith and without negligence—
(a)
Receives payment for a customer of an instrument to which this section applies; or
(b)
Having credited a customer's account with the amount of any such instrument receives payment thereof for himself—
and the customer has no title, or a defective title, to the instrument, the banker shall not incur any liability to the true owner of the instrument by reason only of having received payment thereof.
(2)
This section applies to the following instruments, namely:
(a)
Cheques:
(b)
Any document issued by a customer of a banker which, though not a bill of exchange, is intended to enable a person to obtain payment from that banker of the sum mentioned in the document:
(c)
Any document, not being a bill of exchange, issued by an official in the service of Her Majesty which is intended to enable a person to obtain payment from the Public Account or any other Government account under the Public Finance Act 1977 of the sum mentioned in the document:
(d)
Any document, not being a bill of exchange, issued by any person or authority which is intended to enable a person to obtain payment from any such account as may from time to time be specified in that behalf by the Governor-General by Order in Council of the sum mentioned in the document:
(e)
Any draft payable on demand drawn by a banker upon himself, whether payable at the head office or some other office of his bank.
(3)
A banker shall not be treated for the purposes of this section as having been negligent by reason only of his failure to concern himself with the absence of, or irregularity in, indorsement of an instrument.
In subsection (2)(c) the words “the Public Finance Act 1977” were substituted for the words “Part 111, Part 4, or Part 6 of the Public Revenues Act 1953” by section 160(1) Public Finance Act 1977.
6-
Application of certain provisions of principal Act
The provisions of the principal Act relating to crossed cheques shall, so far as applicable, have effect in relation to instruments (other than cheques) to which section 5 of this Act applies as they have effect in relation to cheques.
Nothing in the provisions of this Act shall be deemed to make negotiable any instrument which, apart from those provisions, is not negotiable.
7A
Interpretation
(1)
For the purposes of sections 7D and 7E of this Act, inter-bank clearing system means any system for the presentment and payment of cheques by electronic or other means between paying and collecting banks or between paying and collecting branches of banks and that is established in accordance with written rules that are binding on those banks or branches.
(2)
Notwithstanding section 73 of the Bills of Exchange Act 1908, for the purposes of sections 7B to 7E of this Act, a cheque includes—
(a)
A document issued by a customer of a bank that, although not a bill of exchange, is intended to enable a person to obtain payment from the bank of a sum mentioned in the document; and
(b)
A draft payable on demand drawn by a bank upon that bank whether payable at the head office or some other office of that bank.
Sections 7A to 7E were inserted, as from 30 June 1995, by section 2 Bills of Exchange Amendment Act 1995 (1995 No 35).
7B
Non-transferable cheques
(1)
This section applies to a cheque that is crossed and that bears across its face—
(a)
The words “Not transferable” or “Non-transferable”; or
(b)
The words “account payee” or “a/c payee”, either with or without the word “only”.
(2)
A cheque to which this section applies is valid only as between the parties to it and is not transferable.
(3)
Where a cheque to which this section applies contains an endorsement that is intended to have the effect of negotiating or transferring ownership of the cheque,—
(a)
The endorsement is not effective to transfer ownership of the cheque; and
(b)
To the extent that a banker collects the cheque without giving effect to the endorsement, the banker acts in the ordinary course of business and without negligence; and
(c)
To the extent that a banker collects the cheque giving effect to the endorsement, the banker does not act in the ordinary course of business and without negligence; and
(d)
If it is necessary for a banker who pays the cheque to consider whether the person by whom or on whose behalf the cheque is presented for payment is the true owner of the cheque,—
(i)
To the extent that the banker pays the cheque without giving effect to the endorsement, the banker acts in the ordinary course of business and without negligence; and
(ii)
To the extent that the banker pays the cheque giving effect to the endorsement, the banker does not act in the ordinary course of business and without negligence.
(4)
Nothing in section 8(1) of the Bills of Exchange Act 1908 applies to a cheque.
(5)
This section shall come into force on the 1st day of January 1996.
Sections 7A to 7E were inserted, as from 30 June 1995, by section 2 Bills of Exchange Amendment Act 1995 (1995 No 35).
7C
Transfer of dishonoured cheques permitted in certain cases
(1)
Nothing in section 7B of this Act prevents the transfer of a cheque to which that section applies if the cheque is transferred—
(a)
After it has been presented for payment by or on behalf of the payee and been dishonoured by non-payment; and
(b)
In favour of any person (including the collecting banker in respect of the cheque) who—
(i)
Is authorised by the payee of the cheque to recover payment of the amount of the cheque on behalf of the payee; or
(ii)
Has paid or credited the payee of the cheque with the whole or part of the amount of the cheque and is authorised by the payee to recover payment of the amount of the cheque on that person' s own behalf.
(2)
This section shall come into force on the 1st day of January 1996.
Sections 7A to 7E were inserted, as from 30 June 1995, by section 2 Bills of Exchange Amendment Act 1995 (1995 No 35).
7D
Presentment of cheques for payment
(1)
A cheque is presented for payment if it is presented in accordance with the following rules:
(a)
Presentment must be made within a reasonable time after the date of the cheque:
(b)
Presentment must be made—
(i)
By the holder, or by some person authorised to receive payment on behalf of the holder, presenting the cheque at the branch of the bank on which the cheque is drawn or at such other place as may be specified on the cheque, as the case may be, at a time when the branch or other place is open for business; or
(ii)
By the bank receiving payment for a customer or for that bank presenting the cheque at the place designated by the paying bank in accordance with the rules of an inter-bank clearing system; or
(iii)
If the cheque is a cheque referred to in subsection (4) of this section or belongs to a class of cheques referred to in that subsection, by the bank receiving payment for a customer or for that bank delivering to the paying bank particulars of the cheque by electronic or other means in accordance with the rules of an inter-bank clearing system:
(c)
Where a cheque is presented for payment in accordance with paragraph (b)(i) or (ii) of this subsection at the proper place for presentment and no person with authority to pay or refuse payment of the cheque is available, no further presentment to the bank upon which the cheque is drawn is required.
(2)
Where a cheque is presented for payment in accordance with subsection (1)(b)(iii) of this section, the paying bank may—
(a)
Request the collecting bank to provide it with such further particulars in relation to the cheque as it may specify; or
(b)
Whether or not it has made a request under paragraph (a) of this subsection, request the collecting bank to exhibit the cheque or a copy of the cheque to it.
(3)
After a cheque that has been presented under subsection (1)(b)(iii) of this section is paid, the collecting bank must, when required to do so by the paying bank, but subject to such conditions as may be specified in the rules of the inter-bank clearing system, give possession of the cheque to the paying bank.
(4)
Any banks or branches of banks that are bound by the rules of an inter-bank clearing system may, from time to time, by agreement in writing, determine that subsection (1)(b)(iii) of this section shall apply in relation to such cheques or such classes of cheques as may be specified in the agreement.
(5)
Nothing in section 45(2) of the Bills of Exchange Act 1908 applies to a cheque.
Sections 7A to 7E were inserted, as from 30 June 1995, by section 2 Bills of Exchange Amendment Act 1995 (1995 No 35).
7E
Liability of paying bank
(1)
This section applies to a cheque that has been presented for payment in accordance with section 7D(1)(b)(iii) of this Act.
(2)
A paying bank that pays a cheque to which this section applies is not negligent and does not act otherwise than in the ordinary course of business by reason only of having determined, by an agreement entered into under subsection (4) of section 7D of this Act, that subsection (1)(b)(iii) of that section shall apply in relation to that cheque or to a class of cheques that includes that cheque.
(3)
Except as provided in subsection (2) of this section, a paying bank that pays a cheque to which this section applies is not relieved from any liability to which it would have been subject if the cheque had been presented otherwise than in accordance with section 7D(1)(b)(iii) of this Act.
(4)
Without limiting subsection (3) of this section, a paying bank that pays a cheque to which this section applies shall be treated as having been required to make such inquiries and take such action as would have been required if the cheque had been presented for payment in accordance with section 7D(1)(b)(i) or (ii) of this Act.
Sections 7A to 7E were inserted, as from 30 June 1995, by section 2 Bills of Exchange Amendment Act 1995 (1995 No 35).
Section 82 of the principal Act is hereby repealed.
(2)
Where in any enactment a reference is made to section 82 of the principal Act, the reference shall, with the necessary modifications, be deemed to be a reference to this Act.
