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Secure your cheques as you would cash
Crossing is no guarantee that you won't be ripped off, writes LUCIENNE FILD
There are many different ways of crossing a cheque, but not all offer you, the drawer, reasonable protection. And the danger of not crossing your cheque appropriately is that you will have limited legal recourse if it ends up in the wrong hands. The object of crossing a cheque is to ensure that the drawee bank (that is, your bank) does not cash it, but pays it to a banker presenting it for payment (which should be the bank of the payee, the party you are paying). The benefit of this is that it enables you, through your bank, to trace the path of the cheque through the banking system and to identify the person who finally presented it for payment. However, this trail procedure is often not possible with cash cheques, which is why it's not advisable to write them. Neville Phillips of Standard Bank's legal division says a cheque crossed solely with two parallel lines means that when it is presented for payment to your bank branch, it must be paid into the payee's account. Phillips warns, however, that this crossing still allows the cheque to be negotiated and to be cashed at other branches of your bank, other banks or businesses. Merely crossing the cheque generally leaves room for abuse, says Phillips. So be aware that a general crossing applies to your bank branch only. Another common form of crossing is writing "not negotiable" between the crossing lines. This, says Phillips, gives the true owner - either you or the payee - some protection. In this instance, the owner can recover loss from any person or institution who/which possessed and accepted the cheque as payment after it was lost or stolen. But, as Phillips points out, crossing a cheque with "not negotiable" written between the lines gives you good statutory protection, but not absolute protection. Some people prefer writing "not transferable" between the crossing lines. Phillips says these words have nothing to do with the crossing, and offer no statutory protection - unlike "not negotiable" - under the Bills of Exchange Act. The objective of "not transferable" is to ensure that the cheque is paid only into the said payee's bank account. If the payee's name does not correspond exactly with the name of the payee's bank account, the bank should refuse to accept the cheque. So how should one cross a cheque to achieve maximum protection? Phillips advises to cross the cheque and write "not negotiable" between the lines. Writing "not transferable" boldly across the face of the cheque for additional protection is optional. Other commonly used words written between the lines, like "and Co" or "A/c payee only" achieve nothing more than would a general crossing. While writing a cheque is safer than carrying wads of cash, cheques must be looked after, especially in view of the recent rise in cheque fraud. Other safety tips: "You can't just say the banks must do it - it's also the responsibility of the drawer and the payee," says Phillips.
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