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A cheque is a written instruction to a bank payable on demand.

There is no strict legal requirement that a cheque be dated. The holder of the cheque has authority to put in the date. It could also be done by the bank.

Post-dated cheques are not invalid but the bank would not cash such a cheque if presented before due date. The Bank would ask you to come back on the date shown on the cheque and you should not accept a post-dated cheque unless you prepared to wait until the date shown on the cheque.

If the post-dated cheque is presented at or after its due date, the bank should pay even if it knows that it is really a post-dated instruction and that payment has been refused on a previous presentation.

A cheque may be dishonored for various reasons. For example: the person who signed the cheque, called the "drawer' may have ordered the bank not to pay on it. Or there may be insufficient funds in the account.

If a cheque is dishonored, the drawer must pay damages to the person who physically holds the cheque unless he can make out a defence. The most common defences are:-
(1) That the holder of the cheque has not given value for the amount shown on the cheque.
(2) The holder has failed to give notice of dishonor where it is required.
(3) The cheque was issued and delivered for a specific purpose, and that particular purpose has not yet been fulfilled.
(4) The drawer's signature on the cheque was forged.
(5) The cheque has been materially altered.
(6) The holder has obtained the cheque by fraud.
(7) The drawer was forced to issue the cheque by threat or other means.
(8) The cheque was issued pursuant to an illegal contract.

However, in some cases the cheque may be wrongfully dishonored by the bank. If that is so, the drawer can sue the bank for breach of contract.

Hong Kong courts regard a cheque as being the same as cash in hand, so that the law favors the person who physically holds the cheque in most situations. Thus the person who signed the cheque may sometimes find himself being held liable to a complete stranger who has come to have lawful title to it.

In order to protect himself against this, the drawer should cross the cheque by putting down 'not negotiable' and/or 'account payee only' on the face of the cheque.

If a cheque is crossed with 'not negotiable', a third party will not obtain any better title to the cheque than the payee has. And the crossing 'account payee only' serves as a warning to the banker with regard to the collection of a cheque for someone other than the payee.

In an extreme case, the drawer may put down 'not transferable' on the cheque. This means that the cheque is only valid between the immediate parties to the contract referred to on the cheque.

Be careful when you write a cheque or accept a cheque as payment from another person. Look to see whether the cheque is an Order cheque or a Bearer cheque. If it is a Bearer cheque you should try to take it to the bank immediately, because if you lose it, the person who finds it can cash it, because he is then the BEARER of the cheque. You should always ensure that the person who gives you a Bearer cheque writes on the back of the cheque instructing the bank that this cheque is only to be paid to you. If the cheque is then stolen or lost, no one else can cash it. Always look to see if the cheques that you deal with are order or Bearer cheques and take appropriate steps to protect yourself in case you lose a cheque.

Remember the law regards cheques almost as another form of cash, and if you lose a cheque someone else might get rich at your expense.

Date of amendment: 1st October 1992