English Banking Law

COMPARE AND CONTRAST THE RESPECTIVE PROTECTION BANKS AND CUSTOMERS ACQUIRE WHEN USING CHEQUES , AS APPOSED TO CARDS , AS A METHOD OF PAYMENT INTRODUCTION There are three types of cheque frauds exists in UK viz . forged counterfeit and fraudulently altered cheque fraud . In 2005 , the cheque fraud in U .K was estimated about ? 40 .3 million - a 13 decrease from the 2004 a steady increase 2003 .In U .K during 2005 , counterfeit cheque fraud was estimated at 3 .23m , forged cheques fraud was estimated at ? 30 .9 m in 2005 and fraudulently altered

cheque fraud was estimated at ? 6 .2 millions SOURCE : FRAUD FACTS -2006 APACS- UK This studies the various protections available to banks and customers when using cheques as opposed to cards , as method of payment PROTECTION AVAILABLE TO CHEQUE PAYMENTS UNDER BILL OF EXCHANGE ACT 1882 , UK (BEA ) AND CHEQUES ACT 1957 Under Bill of Exchange Act , 1882 , under section 81 A , a non-transferable cheques has been defined as follows 81 A (1 . Where as cheques is crossed and bears across its face the words `account payee ' or a /c either with or without the word `only , the cheques shall not be transferable but shall only be valid as between the parties thereto . (2 ) A banker is not to be treated for the purpose of section 80 above as having been negligent by reasons only of his failure to concern himself with any purported endorsement of a cheque which under subsection (1 above or otherwise is not transferable (Cheques Act , 1992 One risk associated with the cheques bearing forged or unauthorized endorsements . However protection is available under the English Bills of exchange Act (BEA , or the Act . Under BEA , a legitimate holder of a cheques payable to bearer attain a good title to the instrument overcoming thereby any adverse claim of ownership that might have been hold good against his predecessor . Accordingly , the payment by the drawee bank to those acquirers discharges the cheques as well as the drawer 's engagement thereon so as to permit the drawee bank to debit the drawee 's account . But this is not applicable to cheques payable to . In the case of payable to cheques , effect of an unauthorised or an absence of endorsement or forged endorsement shall have to be looked into under the circumstances of forged endorsements One of the ways to prevent forged endorsement or loss due to stolen cheques is to use crossed cheques or cheques payable in account . Cheques crossing are available under the BEA , UK . The crossed cheques requires to deposit the cheques into account rather than payable to bearer does not reallocate the cheques theft losses but it minimizes the loss and thus benefits the party on whom the loss falls . Further the losses arose due to stolen cheques or loss cheques payable to bearer fall on the dispossessed owner under BEA . Thus under BEA , reallocation of loss away from dispossessed owner may not be successful in case of crossed cheques...