ABSTRACT
One of the most common ways for a customer to authorise payment is by writing a cheque.10 This cheque authorises the bank to use funds in the customer’s account to pay the stated amount on the cheque to the named payee. Accordingly, if the payee presents the cheque to the customer’s bank, the bank will, under ordinary circumstances, honour the cheque. In honouring the cheque, the payor bank gives money in the amount of the cheque to the named payee and debits the customer’s account for the amount of the cheque and the credit to the payee’s account becomes unconditional. Generally, however, the named payee does not take the cheque directly to the payor’s bank. He would take it to an intermediary, such as his own bank, and obtain payment from there. Once the payee properly transfers the cheque to the intermediary, the intermediary becomes a person entitled to enforce the cheque and thus is just as entitled to payment of the cheque as the original payee.
