Crossing of Cheques

In one line

Crossing is two lines across the face of a cheque that stop it being paid over the counter, so the money must go through a bank account and can be traced.

In the wording a student can write in an exam: by section 123 of the Negotiable Instruments Act, 1881 a cheque bearing across its face an addition of the words "and company" or any abbreviation thereof between two parallel transverse lines, or of two parallel transverse lines simply, with or without the words "not negotiable", is crossed generally; by section 124 a cheque bearing across its face the addition of the name of a banker is crossed specially to that banker; and by section 126 a cheque crossed generally shall not be paid otherwise than to a banker, and a cheque crossed specially shall not be paid otherwise than to the banker to whom it is crossed.

What crossing is for

An uncrossed cheque may be paid across the counter to whoever presents it. If it is stolen, the thief takes it to the bank, is paid in cash, and disappears. The true owner's only comfort is that the bank must have paid in due course, which chapter 450 works.

Crossing removes the counter. A crossed cheque cannot be paid in cash to the presenter; it must be paid to a banker, which means it must go into somebody's account.

And an account leaves a trail. The wrongdoer must have, or must open, an account in a name the bank has verified, and the money can be followed. Crossing does not prevent theft; it makes theft traceable and therefore much less attractive.

So crossing is a direction to the paying banker, and it is not a restriction on transfer. That single sentence prevents the commonest error in this area, and the "not negotiable" discussion below explains why.

The kinds of crossing

General crossing, section 123. "Where a cheque bears across its face an addition of the words 'and company' or any abbreviation thereof, between two parallel transverse lines, or of two parallel transverse lines simply, either with or without the words 'not negotiable', that addition shall be deemed a crossing, and the cheque shall be deemed to be crossed generally."

Note what is essential and what is not. The two parallel transverse lines are essential. The words "and company" are not; two lines alone suffice. The words "not negotiable" are optional and change the effect, as set out below.

Special crossing, section 124. "Where a cheque bears across its face an addition of the name of a banker, either with or without the words 'not negotiable', that addition shall be deemed a crossing and the cheque shall be deemed to be crossed specially, and to be crossed to that banker."