Professional Documents
Culture Documents
Intending holder on scrutinizing the document with reasonable Alteration is executed so cleverly that is not visible on reasonable
care - would observe that it has been altered. scrutiny.
Effect - Only a person who made the alteration Effect - The holder of the cheque has the right to enforce the
and all subsequent parties will be bound by cheque according to its original tenor.
the cheque as it is altered.
Drawers owes a duty of care towards Barbour Ltd v Ho Hong Bank (1926)
Customer of paying banker (drawer) the paying bank (Drawee/paying The manger drew a cheque for $2520.
would not be liable upon the cheque if Bank) to take precautions in drawing The figure was altered to $12520. The
the cheque has been fraudulently up the cheque. bank paid out the altered sum. Held the
altered by a dishonest payee/holder. respondent (Drawer) had to bear the loss
If a dishonest holder alters the amount because the manager was negligent in
The paying bank (drawee bank) of the cheque due to the drawers
cannot debit the account of its drawing the cheque
negligence in not properly drawing up
customer (drawer) the cheque, the paying bank (drawee)
is entitled to debit the customers
account with the full amount
London Joint Stock bank v
Macmillan
A sum was stated in figures but not in
words, 2 pounds was changed to 120
pounds . Held the bank could debit
the firms account with 120 pounds, the
partners had been negligent by
leaving blank spaces for the amounts
in words to be altered.
Protection of Collecting Bank
Examples: Cases