Cheques Overview PDF

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Cheques Overview...

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STEP 1 – IDENTIFY CHEQUE 10: DEFINE CHEQUE -

Define cheque Drawer = signs it (paying it) Drawee = paying bank/Drawer’s bank Pay CASH = Holder o Rights under 49

15: SUM CERTAIN -

If two amounts, takes the conservative approach (lesser amount)

16: DATE -

Cheque not invalid if not dated, antedated or post-dated Still regular and complete on its face Wont be invalid if the date is altered UNLESS stale cheque (15 or more months old – 89/3(5)) But can be revived if the bank contracts the true owner

69: DISHONOURED CHEQUE -

Holder only then can sue you as the drawer under 71

STEP 2 – CLASSIFY CHEQUE 40: TRANSFERRING TITLE -

Bearer cheque = Usually title is transferred by delivery Delivery for intention to transfer title

22: BEARER CHEQUE -

*Everything that is a cheque under s10, but is not an order cheque under 21 = BEARER Title transfer on delivery Your name or bearer 22: no certainty as to who will have title last (other than the bank) IF ‘your name or bearer’ is crossed out and just says PAY o Can just deliver it to next guy BEARER = HIDC

19/21: ORDER CHEQUE -

Transferred when the payee is identified with reasonable certainty Title passes with signatured (PAYEE has to sign the back) Rather than putting it into your bank, you can pass this on o But need to deliver it to them in order to pass title AND have to sign your name on the back  Then become a PAYEE + an INDORSER (and the guy you give it to = INDORSEE)  These guys can now sue if the bank disallows payment = HOLDERS

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40: once you sign it, you can then be liable if things go wrong o Can be sued under 73 ORDER  PAYEE/INDORSEE/NAME

71: Dishonoured cheque 77: -

Immediate person that transfer the cheque, you can still be sued to recover the amount of the cheque

STEP 3 – CROSSINGS 54: -

2 x Parallel lines = Drawer is instructing the bank to put it into their account and not in cash o Put it through the internal banking system

STEP 4 – P’s and D’s  PLAINTIFFS - 49: Holder = Payee, endorsee or bearer o Need title - Bearer o Anyone in possession of the cheque - Statutory Plaintiffs - True owner o Can sue if something goes wrong BUT also bears risk o Bank of NSW v Derem  DEFENDANTS - 31: Liability - 71: Drawer o 32: Void Inoperative - 73: Indorser - 32: Thief/Forgery sign o Deems it to be void against drawer o BUT also deemed to be the thief’s personal signature = him personally liable (Can sue thief) - 77: Transfer or by delivery o 22: Bearer cheque  Transferred title through simple delivery  Not signed just given upon physical touching/delivery  Transferor by delivery = only used by transferee

STEP 5 – DEFENCES -

Absence of consideration

If cheques dishonoured and you gave no consideration = dishonour all good (Cant sue) o 35(1)(a): Consideration is that which is recognised in contract law o 35(1)(b): past consideration is good consideration for a cheque o 36: Holders have presumption in court that you have consideration for the cheque  Up to D to raise a positive defence Defect in title o 3(3): Obtained by thief or by fraud = defective title o 55 SOGA – nemo dat  Cant sue me because your title is defective; D is infected with nemo dat  P = HIDC  Exception to nemo dat – 49(2)(3) o 50 definition  *Superior title to previous parties Discharge defence o 82 o 78 o Fraudulent/material alternation  S3(8) o Once you can prove this = 82  Worthless bit of paper, liability is discharged  Note: 83(3A) – not a defence for a thief, cant sue a thief 32: Forged signature o Operates for bad guy and protects good guy o Endorsement without authority o S3(6) = forged o

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STEP 6 – BANK DEFENCES Drawee/Payee Bank (Channon) -

One named on the face of the cheque 91-94 93**

Collecting bank -

Always the payees bank or maybe bearers bank

Bob = drawer, nigel = order, tyrone = bearer, drawee/payee bank = tsv bank, cairns = collecting bank -

Drawer = bob o 71 liable if dishonoured (69) Drawee/payee bank = 91-94 o Always on the face of the cheque Collecting bank = 50 and 95 o Never named on cheque Payee = nigel (named on face of cheque) o In terms of P only holders can sue (s3) Holder = tyrone o Can sue anyone on the cheques that’s liable

Cheque 1 Townsville Bank Ltd. 12/01/2017 Pay Nigel Smith The sum of six thousand dollars $6,000.00 Bob Down (Signature) Tyrone forged Bob’s signature on this cheque. Tyrone deposited this cheque in his savings account at the Cairns Bank Ltd. His savings account only had a $10 balance at the time of this deposit. The Cairns Bank Ltd immediately allowed Tyrone to withdraw the amount of this cheque in cash and Tyrone used the cash to repay several debts. -

Forged signature Deposited this cheque into his savings account with only $10. Cairns Bank let him withdraw straight away o Before it was cleared through the internal banking system (for value)?

STEP 1 – IDENTIFY CHEQUE S10: Fits definition of cheque Identify Parties -

Townsville bank = drawee bank Bob = Drawee/True owner Nigel Smith = Payee Tyrone = Theif

STEP 2 – CLASSIFY CHEQUE

STEP 3 – CROSSINGS STEP 4 – P’s and D’s STEP 5 – DEFENCES STEP 6 – BANK DEFENCES

Q2: -

Pay clem smith or bearer o Bearer cheque Tyrone cashed at his bank $45,00

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ASH altered to CASH $60 altered to sixty-eight hundred dollars Shouldn’t have left space for alteration Cashed this cheque at payee bank (tyrones bank)

Q3:

Clause – to check account within 7 days and failure to do so discharges liability for an/Drawer’s bank -

Pay CASH = Holder unauthorised transaction...