Question Tag: Bills of Exchange Act

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LRTB – APRIL 2024 – L2 – QB3 – Countermand of Cheque Payment and Bank’s Liability

Customer stops a cheque but provides wrong cheque number; bank pays a similar cheque and dishonors another due to insufficient funds; discuss bank's position on potential lawsuit.

Hakuna Matata is a customer of your Branch and trades under the name Hakuna Matata Enterprise, a Sole Proprietorship. He telephoned you the Manager on February $2^{\text {nd }} 2024$ to inform you that he has drawn cheque number 000031 for GHS 50,000 payable to Halcyon Days Company Limited. The cheque was said to be dated $5^{\text {th }}$ February 2024. He asked you not to pay the cheque upon presentation. The telephone conversation was subsequently confirmed by a written instruction. You programmed your system accordingly to ensure that the cheque was not paid. On $6^{\text {th }}$ February 2024, cheque number 000013 drawn by Hakuna Matata was presented through clearing. The cheque bore all the information identical to those on the stopped cheque except for the cheque number which was 000013 and not 000031 given in the countermand. Since there were enough covering funds, the cheque was paid, reducing the balance on the account to GHS 51,000. Later the same day, cheque number 000014 drawn for GHS 100,000 by Hakuna Matata on the business account and payable to Modern Day Fashions was returned unpaid for insufficient funds. Hakuna Matata is threatening to sue you for paying cheque number 000013 which he had stopped and as a result wrongfully returning cheque number 000014 , which should have been paid. He asks that you write to Modern Day Fashions to explain the bank’s error so that his credit can be restored.

What is the Bank’s position on this?

(20 Marks)

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BCL – May 2017 – L1 – Q7d – Negotiable Instruments

Explain the implications of a discrepancy between the written and numeric amounts on a cheque.

d) Kofi Mensa presented a cheque made out in his name to the BBB Bank. The drawer intended that the drawee withdraw an amount of GH¢2,000.00 which was written in words. The amount written in figures, however, showed GH¢200.00.

Required: Explain the chances of Kofi Mensa in any legal action against the BBB Bank. (5 marks)

 

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LRTB – APRIL 2024 – L2 – QB3 – Countermand of Cheque Payment and Bank’s Liability

Customer stops a cheque but provides wrong cheque number; bank pays a similar cheque and dishonors another due to insufficient funds; discuss bank's position on potential lawsuit.

Hakuna Matata is a customer of your Branch and trades under the name Hakuna Matata Enterprise, a Sole Proprietorship. He telephoned you the Manager on February $2^{\text {nd }} 2024$ to inform you that he has drawn cheque number 000031 for GHS 50,000 payable to Halcyon Days Company Limited. The cheque was said to be dated $5^{\text {th }}$ February 2024. He asked you not to pay the cheque upon presentation. The telephone conversation was subsequently confirmed by a written instruction. You programmed your system accordingly to ensure that the cheque was not paid. On $6^{\text {th }}$ February 2024, cheque number 000013 drawn by Hakuna Matata was presented through clearing. The cheque bore all the information identical to those on the stopped cheque except for the cheque number which was 000013 and not 000031 given in the countermand. Since there were enough covering funds, the cheque was paid, reducing the balance on the account to GHS 51,000. Later the same day, cheque number 000014 drawn for GHS 100,000 by Hakuna Matata on the business account and payable to Modern Day Fashions was returned unpaid for insufficient funds. Hakuna Matata is threatening to sue you for paying cheque number 000013 which he had stopped and as a result wrongfully returning cheque number 000014 , which should have been paid. He asks that you write to Modern Day Fashions to explain the bank’s error so that his credit can be restored.

What is the Bank’s position on this?

(20 Marks)

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BCL – May 2017 – L1 – Q7d – Negotiable Instruments

Explain the implications of a discrepancy between the written and numeric amounts on a cheque.

d) Kofi Mensa presented a cheque made out in his name to the BBB Bank. The drawer intended that the drawee withdraw an amount of GH¢2,000.00 which was written in words. The amount written in figures, however, showed GH¢200.00.

Required: Explain the chances of Kofi Mensa in any legal action against the BBB Bank. (5 marks)

 

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You're reporting an error for "BCL – May 2017 – L1 – Q7d – Negotiable Instruments"

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