As one of the most common negotiable instruments in Nigeria, a cheque is a bill of exchange drawn on a banker payable on demand as defined in SECTIONS 73 of the BILL OF EXCHANGE ACT, CAP; B3 LFN 2004, VOL.2. The use of cheques invokes lots of rights and duties on banks/banks, account-holder/owners and payee (persons whose favour cheques are written) which is actionable in both civil and criminal law. This writing will broaden your mind to your rights and duties either as an accountholder, payee or a bank/banker.
A cheque by use and convention is an unconditional order in writing addressed by an accountholder (an owner and user of an account, also known as the DRAWER) to a bank (the bank that created, manages and administers the account and issued the cheque booklet also known as the DRAWEE) signed by the “drawer”, requiring the banker (the DRAWEE) to pay on demand a sum certain in money or to the order of a specified person or bearer (also known as the PAYEE). This bill of exchange is mostly used in Nigeria as either an OPEN CHEQUE also known as uncrossed cheque or a CROSSED CHEQUE. The open cheque can easily be paid to the bearer over the bank counter while crossed cheques are limited.
The relationship between a bank and an accountholder is that of a “debtor and creditor” and at times it is also that of a “principal and agent”. When an account holder deposits money with his bank, a “debtor and creditor relationship” has been created. The account-holder is the creditor while the bank is the debtor. The bank is under a duty to pay back what the account-holder has given to it under their existing terms and conditions. Where an accountholder issues a cheque to his bank instructing his bank to pay the bearer/payee, then the relationship between the bank and the accountholder is that of agency “principal and agent”. The accountholder is the principal on whose instructions the agent (bank) would pay whom the accountholder so desires. In every relationship there are rights and duties; which one of them in the prevailing banker-customer relationship is to safeguard deposited money and pay same out on instructions of the owner. One of the major means of payment is by cheques and other bank notes. Bank cheques invoke a web of rights and duties; from the bank to the accountholder and from the accountholder to the payee (person in whose favour cheque has been issued).