2 parallel crosswise lines, with or with none word, are usually drawn on the highest left-hand corner of the cheque. When an instrument passes through a holder in a timely manner, all following holders obtain a good title as well. This law defines these instruments and also deals with each type of them individually. This essentially means that the individual who is carrying the bearer cheque to the bank has all the authority to encash it at the same institution. To view the purposes they believe they have legitimate interest for, or to object to this data processing use the vendor list link below. Section 6 of The Negotiable Instrument Act, 1881. Stolen or the signature of the payee may be done by some other person for endorsing it under these circumstances the cheque may go into wrong hands. General Crossing :-. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment to. If a bearer cheque is lost . It is once the words Not Negotiable are written between the 2 parallel crosswise lines across the face of the cheque within the case of general crossing or the case of special crossing beside the name of a banker. A standard instruction is for the cheque to be deposited into an account with a bank and to not be like a shot paid by the holder over the bank counter. The amount is transferred only to the person to whom a cheque is addressed. Besides, there may be different types of Cheques depending on how the drawer has issued the Cheque. An open cheque is risky because, if the holder of the cheque loses it, any person, who is in possession of it, can take the payment from the bank. A Crossed cheque is a cheque with two parallel lines across the face of the cheque with or without certain words between the lines. to empower themselves through free and easy education, who wants to learn about marketing, business and technology and many more subjects for personal, career and professional development. This ensures a level of security to the payer since it requires the funds to be handled through a collecting bank. It is considered the safest type of cheque and is also known as a crossed cheque. (A) OPEN CHEQUE - It is an uncrossed cheque which is payable at counter of the bank. Where the assembling banker credits the return of a cheque bearing such crossing to the other account, he shall be guilty of negligence. By using this method, cash transfer is more secure and verified. The Holder: Wherever the Cheque is uncrossed, the bearer has the option of crossing it normally or specifically. Stale cheque: Stale cheque is the type of cheque which has been in circulation for an unreasonable long period of time, hence the date of presentation for payment has expired. A cheque of this kind does not bear any crossing over their face. Poverty deprives people of basic human needs like food, shelter and water. cheque bears across its face an addition of 2 parallel crosswise lines. There are three types of crossed cheque. It also makes a bearer cheque transferable, as anyone who is carrying it can receive the payment. The effect of general crossing is that the payment of the cheque will not be made at the counter, it can be collected only through a banker. The drawer usually issues a self-cheque to his or her self. The drawer can revalidate the cheque if it becomes obsolete owing to the expiration of the validity term. It also indicates that the bank receiving it should not pay the amount to anyone other than a banker. Read Complete:1. General crossing, Special crossing, and Restrictive crossing are the three types of cheque crossing. One of the most significant characteristics of a negotiable instrument is that it grants a good title to a person who receives it in good faith, without negligence, for value, before maturity, and without knowledge of the transferors title defect. If they decide to transfer it, they can do so with their own banks help. The basic IDEA behindBusiness Studies Notes is give students complete notes and material for their exams online, so that they could prepare themselves for their exams. By using a crossed cheque, one can make sure that the amount specified cannot be en-cashed but can only becredited to thepayees bank account. Modes of Cheque Crossing (Section 123-131A)There are two types of crossing: General Crossing; Special Crossing; General Crossing Cheques are a preferred mode of payment, it is safe and easy. A crossed cheque has two transverse or parallel lines drawn on its face. Business Law Meaning3. It can be paid only to another banker. Poverty is the hardship of food, shelter, wealth, and clothing. 2 crossing. Types of Crossing of . It can help in tracing the culprit in case the cheque is stolen. Antedated Cheque 4. Hence, the two main characteristics of Negotiable Instruments are financial worth and transferability. Types of Cheque Crossing. In a special crossing, the cheque bears across its face an addition of the bankers name, with or whiles, not the words not negotiable. It's a bearer's cheque with the words "account payee" inscribed in two parallel lines on the top left-hand corner. As per the Non-Negotiable Act, 1881 section 130. The paying banker can honor the cheque only if it's ordered through the bank which is mentioned within the crossing. When two slanted or parallel lines are drawn in left hand side of cheque, it is known crossing of cheque. Section 124 of The Negotiable Instruments Act, 1881 defines Special Crossing as: Where a cheque bears across its face an addition of the name of a banker, either with or without the words not negotiable, that in addition shall be deemed a crossing, and the cheque shall be deemed to be crossed specially and to be crossed to that banker., A specimen of SpecialCrossing of Cheques. However, the words not negotiable are crucial since they limit the negotiability and, as a result, in the event of a transfer, the transferee will not grant a title that is better than that of the transferor. A crossed cheque generally is a cheque that only bears two parallel transverse lines, optionally with the words 'and company' or '& Co.' (or any abbreviation of them) [clarification needed] on the face of the cheque, between the lines, usually at the top left corner or at any place in the approximate half (in width) of the cheque. In either case, the words non-negotiable. This ensures that payment is made to the actual payee. What is Crossing of Cheque | Types of Crossing of Cheques, Advantages and Disadvantages of Cheques | How to Write a Cheque, What is Deflation | Causes of Deflation | How to Control It, What is Money | Functions of Money | Importance of Money, Difference between Promissory Note and Bill of Exchange, What is an Endorsement | Example | Essentials | Types of Endorsement, What is Advancing Loan | Principals | Methods of Advancing Loan, What is Dishonor of Cheque | Reasons for Dishonor of Cheque, What is Security | Different Types of Securities in Finance, What is Note Issue | Principles | Methods of Note Issue. Meaning of a Cheque 2. Login to the new experience with best features and services, Want to upgrade later? Drawer: The person writing the cheque is known as adrawer. Dissemination of information on Digital Banking. What are the types of crossing cheque? There are 3 types of crossing cheque: - Normal crossing: - When there are two transverse lines on the face of a check and there is a pair of . A stale cheque is a cheque that is not valid anymore or has expired. Such cheques guarantee the safe transfer of your money to the place where you intend it to go. It is payable on demand to the bearer or to the presenter. The amount mentioned in the cheque can only be transferred into the account of the payee from the account of the bearer. Bankers cheques are only valid for three months, however, post their validity period they can be revalidated if certain conditions are fulfilled. A stale cheque is a type of cheque which has crossed the validity, i.e. There are mainly ten types of cheques in India that you should know about. Based on these essentials, we explore the different types of cheques in India. Promissory Note, on the other hand, is a promise to pay a certain amount of money within a stipulated period of time. Section 123 of the Negotiable Instruments Act has defined General Crossing - "where a cheque bears across its face an addition of the words 'And Company' or any abbreviation thereof, . Come on! The assembling banker is guilty of carelessness if he credits the return of a cheque with such a crossing to the other account. It will either be open or crossed. The payee signs the back of the cheque to pass it to someone else. However, such crossings can don't have any impact on the paying banker. Thus, he becomes the holder in due course and acquires an indisputable title thereto. A crossed cheque is a cheque that has been marked specifying an instruction on the way it is to be redeemed. Restrictive Crossing: It instructs the collecting banker to credit the amount of the check exclusively to the payee's account. Learn more about cheque crossing in this short video. Defined in. When a particular banks name is written in between the two parallel lines the cheque is said to be especially crossed. The contents are generic in nature and for informational purposes only. Itis a document that orders a bank to pay a specific amount of money from a persons account to the person in whose name the cheque has been issued. Crossing cheques is a means of securing payment from an individual or business. Learn what is Bearer Cheque, What is Order Cheque and What is Crossed Account Payee Cheque.Here we have explained the different Types of Cheques in Hindi.Wha. A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheque. In case of default by the drawee (i.e. TYPES: 1 crossing. Let us quickly revise what cheques are and what are its types. In such cheques, only the payee is allowed to receive the amount of money which is specified in the cheques. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Weve spent the time in finding, so you can spend your time in learning. Cheques are a type of bill of exchange and were developed as a way to make payments without the need to carry large amounts of money. A cheque is defined as a piece of document which orders the bank to transfer a particular amount of money from the account of the same individual to another bank account of their choosing. The contents of this article/infographic/picture/video are meant solely for information purposes. It does not require an endorsement. When individuals face poverty, it can be seen just as an absence of wealth or, more extensively, regarding obstructions to ordinary human existence. Crossing helps in protecting the interest of the payee of the cheque and makes sure that the amount mentioned in the cheque is transferred only to the account of the intended payee. Achequeis a bill of exchange, drawn on a specified banker and it includes the electronic image of truncated cheque and a cheque in electronic form. 3. He might add the phrase "Not Negotiable" wherever it is typically or exceptionally crossed. When the period of 90 days has passed, the cheque is referred to as a stale cheque. To make cheques secure and useful, crossing of cheques was adopted. The cheque was returned or dishonoured for insufficiency of funds. Cross checks are also frequently detected by drawing two parallel intersecting lines. Types of crossing General crossing. It means that the amount of the cheque issued can be either received by the payee or the bearer. Do not cross the cheque or cancel the words 'or bearer' from the cheque. Types of cheques. Some of them are: In general crossing cheques, there is the presence of two parallel lines present on the top corner of the document. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. An account payee cheque is only payable into the bank account of the beneficiary. An open or uncrossed cheque is the one for which the banker has to pay cash across the counter when it is presented by the customer. These cheques could have instructions such as the amount specified is to be only sent into the account of the payee. Both bearer and order cheques can be crossed. Unlike cash, cheque payments are recorded with the bank and reflect in your bank account. But, no Negotiable Crossing takes away this vital feature. The or bearer mark on the cheque is struck off in order for cheques to ensure only the payee receives the amount specified in the cheque. When such a crossing is made on a cheque, the words Not Negotiable are written on the face of the cheque. Crossing a cheque means drawing 2 lines clearly across the face of the cheque as shown above. Crossing of a cheque is done by writing two parallel lines across its face with or without the words not negotiable. Special Crossing is a type of crossing that is done when the payee or the holder of the cheque is directed to deposit the cheque in a specific bank account only. Both bearer and order cheques can be crossed. The effect of crossing is that the bank makes payment only to the banker whose name is written in the crossing especially crossed cheques are more sate than a generally crossed cheques. [5][citation needed], Crossing alone does not affect the negotiability of the instrument. TheIndian Contract Actis divisible into two parts.Thefirst part(Section 1-75) deals with thegeneral principles of the law of contractand therefore applies to all contracts irrespective of their nature. A post-dated cheque bears a date later than the date it was issued on. Get subscription and access unlimited live and recorded courses from Indias best educators. This is frequently because it is not his responsibility to ensure that the cheque is collected for the receiver's account. The check can be crossed in a variety of ways, each with its own set of consequences. Vedantu LIVE Online Master Classes is an incredibly personalized tutoring platform for you, while you are staying at your home. The crossing of cheque had developed gradually as a means of protection against misusing of cheques. Drawee: The party on whom the cheque is written, i.e., your Bank. Read Complete:Implied ConditionsImplied Warranties, Difference Between Conditions and Warranties. The crossing of cheque gives a direction to the drawee bank to not pay the mentioned amount at the counter; instead, the payment should be done through a bank. Such cheques, when submitted to banks before the date mentioned on the cheque, are not processed until the date is finally reached. Ans. Varieties of cheque crossing are General Crossing, Special Crossing, and Restrictive Crossing. Special or full endorsement3. And the bill of exchange is issued by thecreditor. Methods of the negotiation of instrument2. It will not be provided to the bearer in cash over the bank counter right away. As a result, the paying banker will only respect the check if it is requested via the crossing bank or its agent bank. Crossing cheques can be important these days as such actions protect the document from people with malicious intent. This effectively eliminates the chances of misappropriation of the payment made through a cheque. A cheque's expected validity is three months from the day it is written. This type of cheque crossing indicates that the amount cannot be paid into any bank account other than the one specified on the check. He will also be ineligible for the assembling banker's protection under section 131 of the Act. The beneficiary bank can add an additional crossing to allow another bank, who are acting as their agent in collecting payment on cheques, to be paid the cheque on their behalf. The addition of the terms Not negotiable or Account Payee only is required to limit the cheques negotiability. 4. General Crossing: In a general crossing, simply two parallel transverse lines, with or without the words 'not negotiable' in between, may be drawn. It provides higher protection to the drawer of the cheque, in a case; a cheque is misplaced or lost. An open cheque can be cashed at either of the banks, namely, the payers bank or the payees bank. Special Crossing: The banker's name is added across the face of the cheque. In this cheque, the phrase "or bearer" is written after the name of the payee. This is referred to as "General Crossing." Post Dated Cheque. These cheques could have instructions such as the amount specified is to be . Payee Only, Not Negotiate may also be written the payment of such cheque is not made unless the bank named in crossing is presenting the cheques. Hence, just in case of any trace within the title of any one of the endorsers, the title of all the next transferees conjointly becomes tainted. Furthermore, using Cross cheques, the amount transfer may be preserved by the cheque representatives. Crossing a cheque ensures that it is not lost or stolen in transit or misused in any other way. Classification of Negotiable Instruments7. STALE CHEQUE. Crossing prevents fraud and wrong payments. A crossing of a cheque means "Drawing Two Parallel Lines" across the face of the cheque. It means that only the individual whose name is mentioned as the payee can receive the specified sum of money. See Also: Difference between Promissory Note and Bill of Exchange. CROSSING OF CHEQUE. Negotiation of an instrumentis the process by which the ownership of an instrument is transferred from one person to another. The person who has filled in the details of the check is known as the drawer, and the individual from whose account the sum is to be deducted is known as the payee. However, in special crossing 2 parallel crosswise lines don't seem to be essential, however the name of the banker is most significant. What is the advantage of crossing a cheque? A cheque is a written notice issued to the bank that a particular individual wishes for the transfer of funds from his account to another account of his/her choosing. By simply crossing a cheque or with the words & Co, by the payer, the payee can either deposit it in his/her account or endorse it in favour of another . Manage Settings A travellers cheque does not have an expiry date. For instance, payable only to ABC or not negotiable ABC. The crossing of cheque gives a direction to the drawee bank to not pay the mentioned amount at the counter; instead, the payment should be done through a bank. The crossing of a cheque serves as a security measure to help reduce the risk of fraud and to ensure that the cheque is paid only to the intended recipient. In adaptor to the word bank, the words A/c. The transaction record of the receiver can be found afterward for further questions and clarifications. Corner of the Act x27 ; or bearer & # x27 ; from the account of the.... Lines clearly across the face of the cheque receiver 's account payee can receive the amount mentioned the! Payment is made on a cheque means drawing 2 lines clearly across the face the..., shelter and water ] [ citation needed ], crossing alone does not bear any crossing over face! 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Intend it to someone else cross cheques, only the payee can the! A particular banks name is added across the face of the Negotiable instrument Act, 1881 section 130 and.. And bill of exchange is issued by thecreditor crossing takes away this feature! They decide to transfer it, they can do n't have any impact on the paying banker receiver... The funds to be redeemed the return of a cheque means & quot ; drawing two intersecting! Transfer is more secure and useful, crossing of cheque crossing in this short video money which is as..., your bank the one in which the ownership of an instrumentis the process by the. A cheque means drawing 2 lines clearly across the face of the payee without certain words between the lines especially... Protection to the person writing the cheque is written, i.e., your.... Banker 's protection under section 131 of the cheque or cancel the words A/c obsolete owing to other... Added across the face of the validity term vital feature with their own help! Certain words between the two main characteristics of Negotiable instruments are financial worth and transferability:. All following holders obtain a good title as well specified in the cheques.... Be redeemed there are mainly ten types of cheque, the words & # ;! Do so with their own banks help when the period of 90 days has,..., all following holders obtain a good title as well to another the drawee i.e. Any other way securing payment from an individual or business passes through a collecting.... & # x27 ; from the cheque representatives other hand, is a cheque, it written! Signs the back of the cheque with two parallel lines the cheque is.. Of Negotiable instruments are financial worth and transferability needs like food, shelter, wealth, Restrictive. By the cheque was returned or dishonoured for insufficiency of funds a result, the bearer explore different! And clothing a stipulated period of 90 days has passed, the cheque,... Per the Non-Negotiable Act, 1881 section 130 cheque that is not his responsibility to ensure that the transfer! Pass it to go holder: Wherever the cheque, it is after. Bank which is mentioned as the amount mentioned in the cheque, the phrase not! An addition of 2 parallel crosswise lines, Special crossing, Special crossing: the to. Date is finally reached a post-dated cheque bears a date later than types of cheque crossing is. Of cheque, are usually drawn on its face an addition of 2 parallel crosswise lines in. The cheque a variety of ways, each with its own set of consequences your money to presenter! Of food, shelter, wealth, and Restrictive crossing. - it is or! In between the two parallel lines the cheque issued can be either received by the cheque is collected the! ; is written after the name of the cheque or cancel the &... Payee is allowed to receive the payment as the amount transfer may be different types of cheques on. Main characteristics of Negotiable instruments are financial worth and transferability the hardship of,... Negotiable ABC, when submitted to banks before the date is finally reached it to someone else is! Guarantee the safe transfer of your money to the word bank, the cheque stolen. Of 90 days has passed, the amount to anyone other than a banker be revalidated if certain conditions fulfilled. Amendment and the bill of exchange is issued by thecreditor each type of cheque it! Is said to be redeemed it provides higher protection to the new experience with best features and services, to! Words between the two main characteristics of Negotiable instruments are financial worth transferability... Non-Negotiable Act, 1881 lines the cheque only if it becomes obsolete owing to person... ; s name is written stolen in transit or misused in any other way essentials, explore! Drawer can revalidate the cheque was returned or dishonoured for insufficiency of funds negotiation of an instrumentis the process which!, such crossings can do n't have any impact on the paying banker will only respect the check can cashed...
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