Updated on December 8, 2021 Show
Reading time: 2 minutes Cheques are becoming increasing obsolete. Plastic (card) transactions and electronic fund transfers (EFTs) offer a safe, reliable and most importantly, instant method of money transfer. Unlike cheques, there is no risk of the transactions ‘bouncing back’ or becoming ‘stale’. Consumers want to be able to source products from all around the world via the Internet. For obvious reasons, many e-traders do not accept cheques as a method of payment. Cheques, however, are not yet entirely extinct, and many government organisations and businesses continue to issue them. The question is then, what is the drawer’s liability when issuing a cheque and in what circumstances can they refuse to honour it? Liability of a Drawer Upon the Issue of a ChequeUnder sections 58 and 71(a) of the Cheques Act 1986 (Cth), a drawer of a cheque is not liable unless and until it is presented for payment. However, a cheque once presented for payment must be paid. Similarly, sections 70 and 71(b) of the Act set out that a drawer of a dishonored cheque continues to be liable, regardless of whether or not he or is she is aware of this fact. In such circumstances, the drawer will be required to compensate the holder for:
The Consequence of Delaying in Presenting a Cheque for PaymentThe general liability of a drawer is not absolute. A drawer will not be liable unless the cheque has been presented for payment within a ‘reasonable time’. What amounts to a reasonable time is determined on a case-by-case basis. Under section 60(3) of the Act, the below factors determine what is a reasonable period:
LegalVision cannot provide legal assistance with this topic. We recommend you contact your local law society. Register for our free webinars Mitigating Risks When Buying a BusinessTuesday 15 November | 11:00 - 11:45amOnlineLearn how to mitigate your legal and financial risks when buying a business. Register for our free webinar today. Register Tips for Terminating Commercial ContractsThursday 17 November | 11:00 - 11:45amOnlineNeed to end a commercial contract? Learn how in our free webinar. Register today. Register How Qualifying as an Early Stage Innovation Company (ESIC) Can Help Your Startup GrowThursday 24 November | 11:00 - 11:45amOnlineAttract more investors to your startup by having it deemed an ESIC. Our free webinar explains. Register today. Register Straight from the ‘Open’ Source: Legal Considerations for Open Source SoftwareWednesday 30 November | 11:00 - 11:45amOnlineDoes your business use open source software? Understand your legal risks and obligations. Register today for our free webinar. Register Marketing and Advertising 101: Understanding Your Legal ObligationsThursday 1 December | 11:00 - 11:45amOnlineUnderstand how to market your business without breaching the law. Register for our free webinar today. Register view all eventsWas this article helpful?Thanks! We appreciate your feedback – your submission has been successfully received. About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership. By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee. Learn more about our membership
About Vanja Simic (Read all articles by Vanja) Vanja is an IP lawyer. Vanja has previously worked in the private healthcare industry for over 7 years servicing SMEs, corporates (government and non-government) and not-for-profits. She also advises on the Australian Consumer Law, the Australian Privacy Principles, IP licensing, trade promotions and liquor licensing. Vanja’s extensive experience in working with various organisational stakeholders gives her unique commercial insight and makes her well placed to assess and meet the legal and broader general commercial needs of organisations. Do you have to accept cheque?In other words, you're not obliged by law to take cheques. In fact, businesses are fully within their rights to decide which payment methods to accept. Merchants can legally refuse payments of any kind – cheques included – and only accept what they find convenient.
Are cheques legal tender in Australia?In Australia, the use of cheques is governed by both the Cheques Act 1986 (Cth) and common law. A cheque is an unconditional order by the customer to the bank to pay a third party. Generally cheques pass through a clearing house, although they can be paid on demand at the customer's bank.
Is it legal to refuse cash payment UK?Is it legal to refuse cash? In the UK it is not illegal for businesses to refuse cash as payment and, in the same breath, it's not illegal for them to refuse card payments, either. The only situation where this isn't the case is when a business is accepting payment for a debt.
Is a bank cheque legal tender?The law generally treats bank cheques in the same manner as ordinary cheques. Although some people regard bank cheques as equivalent to cash, there are certain circumstances where a bank cheque may not be paid.
|