tiate, cash, or facilitate the use of a cheque which is not duly stamped, are severally liable to the penalty.

LIMITED POWER.

5787. Not Legal Tender.-A cheque cannot be, in any case, a legal tender, whether it be drawn by the person tendering it, or by any other person (5690); consequently,

5788. No Obligation.—No one is legally bound to take a cheque unless he has agreed to accept payment in that form; but,

5789. Judicious Course.

It is usually judicious of a creditor to

take the cheque of his debtor; because,

5790. Evidence of Debt.-Though a cheque may be dishonoured, that circumstance does not exonerate the drawer, but rather strengthens than otherwise the original claim of the creditor for the amount; though

5791. Terms of Receipt. It is desirable, whenever a cheque is received in payment, not to give a receipt as for cash, but to write "received a cheque for" the amount, which indentifies the transaction; otherwise,

5792. Consequence of Indifference. If the recipient of a cheque gives a receipt, without specifying that it is in respect of a cheque, it might be pleaded that cash really was paid, and that the cheque produced was a separate responsibility.

ESSENTIALS OF A CHEQUE.

5793. A cheque may be effectually written or printed on any kind of paper:

5794. With any kind of instrument; and

5795. In any form of words which the drawer may choose to adopt; providing that

5796. The meaning must be clearly intelligible;

5797. It must be duly signed by the drawer; and

5798. It must be duly stamped (5784).

5799. Informal Cheques.—An informally drawn cheque is quite effectual and binding upon all parties (5786), unless it can be disputed on its merits irrespective of its informality; but,

5800. Forms.-The universal custom of banks issuing blank forms for the ordinary cheques of their customers usually settles the question of their form; though,

5801. Impromptu Cheques.-When a form is not at hand, no hesitation need be felt at either issuing or receiving a cheque written upon a plain slip of paper, if an adhesive stamp be duly affixed (5786).

5802. Amount in Words.—In every case it is desirable to write the amount in words, and also in figures, but that is not essential.

VARIETIES OF CHEQUES.

5803. Open Cheques.-What is called an open cheque includes the words, "Pay to or Bearer;" and it is payable as soon as signed, to any person who may present it, either the drawer, or any other person, whether the person be imaginary or not; but,

Pay

5804. To Order.-There are several advantages in writing to or Order," or the word “Bearer" may be erased, and the word "Order" written over it; for,

5805. Endorsement.—When a cheque is written "to order," it is not payable until the person in whose favour it is drawn has written his name across the back of the cheque, which is called the endorsement; therefore,

5806. Advantages of "To Order."-There are two advantages in a cheque to order: the receiver, until he has endorsed it, may be sure that the amount will not be paid to any one else, and the endorsement, when written, is a better evidence that the amount has been paid, than is any formal receipt.

PRESENTMENT.

5807. Right of Holder.-An open cheque, or a cheque to order, and duly endorsed (5805), entitles the holder (whether the original holder or not) to payment of the amount specified upon presentment at the bank upon which the cheque is drawn.

5808. Obsolete Law.-Formerly the holder of a cheque was bound to present it for payment not later than the next day after he received it; but,

5809. No Specific Time.-The present law permits the holder of a cheque, in all ordinary cases, to keep it by him as long as he pleases, without militating against his legal rights therein; but,

5810. Failure of Bank.-If the holder of a cheque keeps it by him more than one clear day, and it is afterwards dishonoured in consequence of the failure of the bank, the drawer is exonerated, and the holder has to bear the loss.

HONOUR.

5811. When a cheque is paid on presentation, it is said to be "honoured."

5812. Dishonour.-If not paid on presentment, it is said to be dishonoured."

5813. Obligation of Bank.-The bank upon which a cheque is drawn is bound to honour it by paying the amount in legal tender (5691), upon presentment thereof during the usual business hours of the bank, unless some sufficient excuse can be pleaded.

5814. Insufficient Balance.-As a general rule, there is but one excuse which a bank can plead for refusing to honour a cheque, namely, that the drawer has not a sufficient balance at the bank to cover the amount.

5815. Momentary Deficiency.-When a cheque is duly presented, and the balance of the drawer at the bank is at the moment insufficient to cover the amount, the bank is exonerated; but,

5816. Double Responsibility.—Numerous cases have arisen where the responsibility of a bank in refusing to honour a cheque has been doubtful.

5817. Careless Oversight.-On a certain morning, the customer of a bank had a balance there of £69, and about three in the afternoon a cheque of a customer was presented for £87. The paying clerk, after referring to a book, said there was not a sufficient balance to the credit of the customer, but suggested that the cheque had better be passed through the clearing house. It afterwards turned out that about one o'clock on the same day, £40 was paid in to the credit of the customer, so that there were, in reality, sufficient assets to the credit of the customer when the cheque was presented at three. The bank pleaded that from one to three was not reasonable time, but, upon an action arising, Lord Tenterden said it was a discredit to a person, and therefore injurious, to have a draft refused payment for so small a sum; for it showed that the banker had very little confidence in the customer. The action was founded upon the implied contract of the banker to pay the cheques of the customer whenever they should have money in their hands belonging to the customer, or within a reasonable time after they had received such money, and the customer was entitled to temperate damages, though no actual damage had been proved.

CROSSED CHEQUES.

5818. Long Recognized.-It has been a recognized practice for certain persons to write across the face of some of their cheques the name of a bank, and a cheque so written upon is a "crossed cheque."

5819. To Bank Only.-Crossed cheques are payable only upon presentation by the bank indicated in the crossing; therefore,

5820. Holder not Entitled.-The private holder of a crossed cheque cannot obtain payment by presenting it himself.

5821. Credit of Account.-His only course is to pay it to the credit of his own banking account if he has one; or, otherwise,

5822. Favour of a Friend.-To induce some person or firm who has a banking account or other means of disposal, to cash the amount in exchange for the cheque.

MANNER OF CROSSING.

5823. Former Uncertainty.-Formerly there was much doubt as to the proper manner of crossing a cheque, and the binding effect of a crossing upon all the parties concerned; but,

5824. Modern Legislation.-Recent legislation has defined the law and practice of crossed cheques, so that the doubts which were once current about them are now set at rest.

5825. By Whom.-A cheque may be crossed by either the drawer, or the receiver, or by any holder through whose hands it may pass.

5826. Effectual Crossing.-Two parallel lines drawn at right angles with the original writing across the middle of a cheque, with the words “and Company” (or an abbreviation of such words) written between the right-hand end of the lines, is an effectual crossing; thus,

5827. Some Bank.-When a cheque is simply crossed as ordinarily & Co., it implies that it must be paid through some bank;

in that case,

5828. Any Bank.-Any bank is entitled to presentment and payment; but,

5829. Particular Bank Only.-The person who originally crosses a cheque may, instead of writing " & Co.," write in full the name of the bank through whom he wishes the amount to be paid; or,

5830. Completion.-Any holder of a cheque which is already crossed simply "& Co.," may write or print in the name of any bank he chooses; but,

EFFECT OF CROSSING.

5831. Particular Bank.-When once a cheque is fully crossed to a particular bank, it is thenceforth payable through that bank only.

ALTERING CROSSINGS.

5832. Felony.-Any person who alters the crossing of a cheque, already crossed to a particular bank, or who obliterates or attempts to obliterate the crossing of a cheque, is liable to criminal proceedings, and if convicted, is punishable as for felony.

BANK RESPONSIBILITIES.

5833. Reverse Obligation.-The duty of a bank, upon whom a crossed cheque is drawn, is precisely the reverse of that imposed by a cheque which is not crossed (5811); for,

5834. Obligation Not to Pay.-The bank upon whom a crossed cheque is drawn is bound to refrain from paying the amount to any party except to some bank if crossed "& Co.," or to the particular bank named, if any; but

5835. Doubtful Crossings.—Cases have arisen where, from apparent carelessness, the crossing of a cheque has been entirely doubtful or illegible, and a bank improperly paying the amount of such a cheque, is expressly exonerated.

5836. Damages.-Formerly, when a bank improperly paid the amount of a crossed cheque on presentment by a private individual, the only penalty was the liability of the bank to the person who effected the crossing, for damages for negligence; but,

5837. Void. The payment of a crossed cheque, otherwise than in accordance with the crossing, is now not only esteemed negligence; it is absolutely void as against the drawer, and the bank has to bear the loss, if any arises.

SECURITIES.

DEFERRED PAYMENTS.

5838. Documentary Evidence.-Debts of money, whether borrowed or owing in the course of business, may be deferred by mutual agreement between the parties, and such debts are usually identified by means of promissory notes, bills of exchange, or some other documentary evidence recognized by the law.

COMMERCIAL SECURITIES.

5839. Deferred payments, so far as business transactions are concerned, are usually secured by binding promises to pay, according to law (5850), with or without guaranty (6493) on sureties (6482), or else by means of pawns or pledges (6097) of personal property, including what are called bills of sale (6397).