Revise Lecture 25 Features of a Cheque Cheques

Revise Lecture 25

• Features of a Cheque

Cheques Features of a Cheque • Some important features of a cheque are given below; 1. A cheque must be in writing and duly signed by the drawer. 2. It contains an unconditional order. 3. It is issued on a specified banker only.

• Types of Cheques

Cheques • Broadly speaking, cheques are of four types; 1. Open cheque 2. Crossed cheque 3. Bearer cheque 4. Order cheque

• Anted – dated Cheque

Cheques • Stale Cheque

Cheques Stale Cheque • A cheque which is issued today must be presented at bank for payment within a stipulated period. • After expiry of that period, no payment will be made and it is then called a stale cheque. • Find out from your nearest bank the validity period of a cheque.

Cheques • Mutilated Cheque

Cheques • Post-dated Cheque

• Parties to a Negotiable Instruments

Negotiable Instrument • The important parties to negotiable instruments are; Promissory note: 1. Maker 2. Payee 3. Endorser 4. Endorsee

Negotiable Instrument Bill of Exchange: 1. Drawer 2. Drawee or acceptor 3. Endorser 4. Endorsee

Negotiable Instrument • Holder in Due Course

Negotiable Instrument Holder in Due Course Holder in due course means any person who for consideration becomes the possessor of a promissory note, bill of exchange or cheque payable to bearer or the payee or endorser thereof if payable to order, before the amount mentioned therein becomes payable and without sufficient cause to believe that any defect existed in the title of the person from whom he received the title.

Negotiable Instrument Holder in Due Course The definition specifies that: 1. The holder has to possess the instrument in due course and before the date of maturity. 2. The consideration must be legal and adequate. 3. There should be sufficient cause to believe that he possessed the instrument in good faith and with reasonable care.

Negotiable Instrument Holder in Due Course 4. The holder should not become the holder in due course even if he received the instrument without any suspicion or knowledge about such defects. 5. Notice of any defect in the title subsequent to the date of acquisition should not affect the rights of the holder in due course.

Lecture 26 • Banker and Customer

Banker and Customer The Banker • The role of a banker is one filled with multiple duties and responsibilities. • There are different types of bankers and each one is unique in his own way. • Some of these individuals work for large corporate conglomerates while others work for small town financial institutions.

Banker and Customer The Banker • Each banker has his own set agenda in his role as a banker. • A banker is an individual (or an institution) who advises his clients with regard to financial matter. • The duties concerning saving, loans, taxes, investment and securities are all within the job realm of a banker.

Banker and Customer • The Banker He will provide financial assistance to the client in accordance with their needs.

Banker and Customer • The Customer

Banker and Customer The Customer • In banking, a customer is someone who makes use of or receive the services of the bank. • The word customer historically derives ‘custom’ meaning habbit, so a customer was someone who frequented a particular shop, who made it a habbit to purchase goods there

Banker and Customer Duties of a Customer All banks carry out the customer’s instructions in a business-like manner. In return, the customer has special duties of cooperation and other duties of care. A customer is bound to the following;

Banker and Customer Duties of a Customer 1. Communication of important information and changes. 2. Unambiguous information in orders and instructions 3. Care in transmission of particular orders

Banker and Customer • Duties of a Customer 4. Use of forms 5. Express notification of any special instruction 6. Notification of time limits and dates 7. Complaints to be made immediately 8. Checking of confirmation of the bank 9. Liability arising from neglect of duty

Banker and Customer • Banker’s obligation to protect customer secrecy

Banker and Customer • The obligation of a banker to observe secrecy relating to affairs of his customers is an implied term of the contract between a banker and his customer. • A banker would not divulge to third persons, without the consent of the customer, express or implied, either the state of the customer’s account or any of his transactions with the bank.

Banker and Customer • Banker’s right to charge interest and commission

Banker and Customer Banker’s right to charge interest and commission • The bank generates its profits from the differential between the level of interest it pays for deposits and other sources of funds, and the level of interest it charges in its lending activities. • All banks at any time and form time to time are entitled to charge the rate of interest on loan either by express agreement or right of custom or usage of trade.

Banker and Customer Banker’s right to charge interest and commission • They also entitled to charge compound interest and commission for services rendered to the customer. • In the absence of an express agreement or without due notice, a bank is not allowed to debit charges at any date other than the customary dates.

• Banker’s Right to Lien

Banker’s Right to Lien • A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary.

Banker’s Right to Lien • Lien is, in its primary sense, a right in one man to retain that which is in his possession belonging to another until certain demands of the person in possession are satisfied. • In its primary sense, it is given by law and not by contract.

Banker’s Right to Lien • A banker’s lien on negotiable securities has been judicially defined as ‘ an implied pledge’. • A banker has, in the absence of agreement to the contrary, a lien on all bills received from a customer in the ordinary course of banking business in respect of any balance that may be due from such customer.

• Banker’s right of set-off

Banker’s right of set-off • The of right of set-off is also known as the right of combination of accounts. • A bank has a right to set-off a debt owing to a customer against a debt due from him. • ‘A legal set-off is where there are mutual debts between the plaintiff and the defendant, or if either party sue or be sued as executor or administrator, one debt may be set against the other’.

Banker’s right of set-off • From a commercial standpoint, a right of setoff is a form of security (right) for a lender. • It is an attractive security because its realization does not involve the sale of an asset to a third party. • A set-off must be in the form of a cross claim for a liquidated amount, and it can be pleaded only in respect of a liquidated claim.

• Deposit Account

Deposit Account • The main banking activities consist of acceptance of deposit from the public for the purpose of lending to businessmen and others who may seek loans. • Actually, the money deposited in any bank is mostly the saving of the people. • Money may be needed in future for various purposes such as medical treatment, marriages and for other events.

Deposit Account • So people keep their savings with someone where it will both be safe and earn a return. • A bank is a such place where money once deposited remains safe and also earns profit.

• Types of deposit account

Types of deposit account • Bank deposits serve different purposes for different people. • Some people cannot save regularly, they deposit money in the bank only when they have extra income. • Some, mostly businessmen, deposit all their income from sales in a bank account and pay all business expenses out of the deposits.

Types of deposit account • Keeping in view these differences, banks offer the people the facility of opening different types of deposit accounts to suit their purpose and convenience.

Types of deposit account • Accordingly, bank deposit accounts may be classified as; 1. Savings bank account 2. Current deposit account 3. Fixed deposit account 4. Recurring deposit account 5. Salary account

• Withdrawal from deposit account

Withdrawal from deposit account • Customer deposit his savings for use in future. • The need for money may arise any time. So customer should know how to get back your money from the bank.

Withdrawal from deposit account Money can be withdrawn by using; 1. Withdrawal form 2. Cheque 3. ATM card