Analyses: Altered cheques and the collecting bank

• Jurisdiction: South Africa
• Pages: 365-380
• Published date: 25 May 2019
• Citation: (1997) 9 SA Merc LJ 365
• Date: 25 May 2019
• Author: JT Pretorius

ALTERED CHEQUES AND THE COLLECTING BANK

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365

Altered Cheques and the Collecting Bank

JT PRETORIUS

University of South Africa

1 Introduction

The unauthorised alteration of cheques has become a major problem

for commercial banks in South Africa. It may therefore be worthwhile to

examine some of the basic legal principles relevant in the allocation of the

potential losses that may occur when a cheque has been fraudently altered

without the drawer's consent. A cheque may be materially altered in a

number of ways. For example, the amount (or other particulars such as

the date) of the cheque may be altered or raised by the intentional act of

some third party without the authority of the drawer; the name of the

intended payee may be changed or altered without the authority of the

drawer; or the place and time of payment my be altered (see

Malan on

Bills of Exchange, Cheques and Promissory Notes in South African Law

(1997) 3 ed by FR Malan &

JT

Pretorius ('Malan') par 136). Some

alterations or additions may be specifically sanctioned by the Bills of

Exchange Act, 34 of 1964, for example, the holder of an uncrossed

cheque may cross it generally or specially (s 76(2)). I am here more

(1997) 9 SA Merc LJ 365

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366

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(1997) 9 SA Merc LJ

concerned with the unauthorised material alterations of a cheque that has

the effect of materially altering the mandate of the drawer.

2 The Bank and Customer Relationship

The contract between bank and customer is classified as a contract of

mandatum (Malan par 203). This contract obliges the bank to render

certain services, the so-called services de caisse, to the customer on his

instructions (Malan par 203; JC Stassen 'Banke en Hul Kliënte: 'n

Herwaardering van Engelsregtelike Eienaardighede in die Lig van die

Suid-Afrikaanse Gemenereg, Bankwet en Wisselwet' (1983)

5 Modern

Business Law

80; FR Malan 'The Liberation of the Cheque' 1978

Tydskrif vir die Suid-Afrikaanse Reg

197 at 201; JC Stassen 'Drieparty

betalingsmeganismes in die Moderne Bankreg: Die Regsaard van die

Verhouding tussen Bank en KUM' (1980) 2

Modern Business Law

77 at

79; JT Pretorius

'Commonwealth Trading Bank v Sidney Wide Stores

(Pty) Ltd

(1981) 55 ALJR 574: Die Verhouding tussen 'n Bank en Sy

Kliënt' (1982) 45

THRHR

333; W Faul 'Bankgeheimnis: Aard van Bank-

en Kliëntverhouding' 1989

Tydskrif vir die Suid-Afrikaanse Reg

145;

Bank

of Africa v Evelyn Gold Mining Company Limited

(1894) 1 OR 24 at 27;

OK Bazaars (1929) Ltd v Universal Stores Ltd

1973 (2) SA 281 (C) at

288). Where the mandatary (the bank) has performed in terms of the

mandate contained in an individual cheque, the mandatary is entitled to

be compensated and reimbursed by the mandator. In

Volkskas Bpk v

Johnson

(1979 (4) SA 775 (C) at 777-778) Grosskopf J explained as

follows:

'Die verhouding tussen bankier en kliënt behels dat die bankier sy kliënt se opdrag om te

betaal, soos uitgedruk in 'n tjek, moet uitvoer. Indien hy dit doen, is hy geregtig om die

kliënt se rekening te debiteer met die bedrag van die tjek.'

3 Forgery of the Drawer's Signature

Where the signature of the drawer on a cheque is forged, the drawee

bank normally pays the cheque at its own risk and may not debit the

account of the drawer or recover from him the amount so paid. Although

the bank on which such a cheque is drawn is generally not entitled to

debit the account of its customer with the amount of a forged or

unauthorised cheque, it may do so if the customer adopts the forged or

unauthorised signature, or if the customer knows of the forgery or lack of

authority and fails to notify the bank timeously (Malan par 208; JT

Pretorius 'The Forgery of a Drawer's Signature on a Cheque: Proposals

for the Reform of the South African Law' in: Coenraad Visser (ed)

Essays in Honour of Ellison Kahn

(1989) at 271ff). In

London Joint Stock

Bank Ltd v Macmillan & Arthur

([1918] AC 777 at 823) Lord Shaw

observed that 'a cheque with the signature of a customer forged is not the

customer's mandate or order to pay'. In this connection, the skillfulness

or otherwise of the forgery is entirely irrelevant. The sole ground of

decision is that the bank has in fact made payment without his customer's

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