Cheques

Press, Volume CV, Issue 31052, 6 May 1966, Page 12

Cheques

Sir, —Today’s report of the theft of a number of cheques from a post office box prompts me to inquire the reason for the banks issuing their cheques in bearer form. And, incidentally, what do their customers think is achieved by crossing a bearer cheque, “Not Negotiable”?— Yours, etc..

JOHN ABBOTT. Ashburton, April 26, 1966. [The research director of the New Zealand Bankers’ Association (Mr R. O. Smillie) says:—“By ‘bearer form’ we presume that Mr Abbott refers to cheques being printed ‘Pay or Bearer’. The alternative is that they be printed ‘Pay or Order,’ which would mean .that in cases where a payee is- named and negotiates the cheque other than through his own bank account, he must endorse the cheque. It should be appreciated, however, that requiring a cheque to be endorsed is not sufficient protection for the drawer should the cheque fail to get into the right hands. However, if a cheque is crossed ‘Not Negotiable’ and the payee is named, the onus is placed on anyone accepting the cheque to ensure that they are obtaining a good title to the cheque. In other words, if A accepts this cheque from B, who is a wrongful holder, the drawer could claim on A. Generally there is no advantage to the drawer in making such a cheque payable to ‘order.’ Summing up, the safe way for a customer to ensure that payment is received by the person entitled to it is to name the payee on the cheque and cross it ‘Not Negotiable.’”]