SECTION  1:  Definition and distinct characteristics of negotiable instruments


The negotiable instrument refers to a promissory note, bill of exchange or cheque payable either to order or bearer. These three instruments are usually characterised as negotiable instruments.

Some writers have attempted to define a negotiable instrument as:  “ the property in which it is acquired by anyone who takes it bona fide, and for value” notwithstanding any defect of title in the person from whom he took it. Another useful definition is given by Thomas who states that “ an instrument is negotiable when it is, by a legally recognised custom of trade or by law, transferable by delivery or by endorsement and delivery, without notice to the party liable, in such a way that a) the holder of it for the time being may sue upon it in his own name, and b) the property in it passes to a bona fide transferee for value free from any defect in the title of the person from whom he obtained it”.

These definitions clearly reveal the true nature of negotiable instruments. A negotiable instrument is a transferable document either by the application of the law or by the custom of the trade concerned. The special feature of such an instrument is the privilege it confers on the person who receives it bona fide and for value. To possess good title thereto, even if the transferor had no title or had effective title to the instrument.

Negotiable instruments are a practical creation by merchants to facilitate transfer of funds and payment. They serve as a medium of payment more convenient than the traditional silver and gold coins.  Today, negotiable instruments have become more sophisticated and modernized.   The legal relationship created by negotiable instruments is similar to those of debtor and creditor.  The issuer is a debtor, i.e. agrees to pay the particular sum of money, while the recipient is in turn a creditor, i.e. the negotiable instrument is a proof of his entitlement, against the issuer, of the particular sum specified in the negotiable instrument.

The creditor: holder of the bill: can negotiate the bill, i.e. exchange the value specified in the bill as a consideration for the conclusion of a contract, e.g. use of the bill to pay for a business transaction.  The new holder of the bill acquires the same rights against the original issuer not so much different from the first holder.  Such transactions have led the legislature to articulate detailed legal regimes to deal with the type of negotiable instruments as well as the rights and duties of their issuers, holders and guarantors.

Different kinds of negotiable instruments


A bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or, to the bearer of the instrument.

The essential requisites of bill of the exchange are:


  • 1-It must be in writing;
  • 2-It must be containing an “order to pay”;
  • The order to pay must be unconditional. The order is not conditional by the reason of the time for payment of the amount or any instalment thereof being expressed to be on the lapse of certain period after the occurrence of a specified event which, according to the ordinary expectation of mankind, is certain to happen, although the time of its happening may be uncertain.
  • It must be signed by the maker
  • 5-The drawee must be certain. A person is certain although he is miss-pelt or designated by description only.
  • 6-The sum payable must be certain. The sum payable may be certain although it includes future interest or is not payable at an indicated rate of exchange, or is according to the course of exchange, and although the instrument provides that, on default of payment of an instrument, the balance unpaid shall become due.
  • 7-The order must be to pay money only
  • 8-the payee must be certain


The following is an example of a bill of exchange:


                                                   Kigali 1-10-05



Rs. 10.500


On demand pay to M/s Mugenzi Enterprises Kigali, or order a sum of Rwandan Francs  Ten Thousand Five Hundreds only for Value received.


To                                                                     Sd/-


M/s Gakire.Mount Road,Kigali.




A promissory note is an instrument in writing (not being a bank note or a currency note) containing an unconditional undertaking, signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

The essential requisites of a promissory note are:

  • It must be in writing
  • It must contain an undertaking to pay.
  • The undertaking to pay must be unconditional
  • It must be signed by the maker.
  • it must undertake to pay a certain sum
  • The undertaking must be to pay in money only.
  • the payee must be certain.


These are promissory notes:

  • 1-I promise to pay B or order Rwf.500.
  • 2-I acknowledge myself to be indebted to B in Rwf. 1,000 to be paid on demand for value received.
  • Specimen of promissory note:


                                                             Kigali 6-07-2009



On demand I promise to pay Mr. Mugenzi or order a sum of Rwandan Francs  Six Thousands only.












A cheque is a bill of exchange drawn on a specified banker and expressed to be payable otherwise than on demand.

Specimen of cheque


Bank de Kigali

No. H/SB 362507

Date 25th march 2009





Pay to Mr. Majaliwa ………………or bearer Rwandan Francs Five Hundred only……………….



Account Nº.5628                                  Sd/-


Distinguishing features of cheque, bill of exchange and promissory note

Based on the above statutory definitions, the followings are the distinguishing features of the three negotiable instruments indicating the similarities and contrasts between them: i) Instruments in writing

The law requires that a cheque, bill of exchange or promissory note must be an instrument in writing. It does not specify any particular material on which it is to be written. Though law does not prohibit a negotiable instrument written with a pencil, in practice the bankers do not accept such instruments because of risk involved. Alterations therein may be easily made which cannot be detected.

 Unconditional order/promise

A cheque and a bill of exchange contain order to the drawee whereas a promissory note contains a promise by the maker to his creditor. Thus the main difference between a cheque and a bill on the one hand and a promissory note on the other is that the cheque and the bill contain an order from the creditor to the debtor to pay a sum of money while the promissory note contains an undertaking or promise made by the debtor to his creditor to pay the sum specified therein.

However, there is one common feature of a promissory note, cheque and a bill. The promise in the former and the order in the latter must be an unconditional one, i.e., the payment should not be made dependent upon the happening or occurrence of a particular event or on the fulfilment of any requirement. But if the time for payment of the amount (or any of its instalments) is expressed to be on the lapse of a certain period after the occurrence of a specified even, the promise or order to pay is not deemed ‘conditional’ provided the event is certain to happen according to ordinary expectation of mankind, although the time of its happening may be uncertain. Thus, a distinction may be made between an event, which is bound to take place according to human expectation, and the one, which may or may not at all take place. For example, the death of a particular person is an event which shall definitely take place; its timing may be uncertain. But the marriage of a person, or his departure to or return from a foreign country are events, which are uncertain to take place. The words in cheque or the bill must be in the nature of an order rather than a request, though it is not necessary that the word ‘order’ is specifically mentioned therein. Words of courtesy, if any, such as ‘please’ do not make the instrument invalid on this ground. The words in the promissory note should also amount to an unconditional promise to pay the specified amount; otherwise it will not be treated as a promissory note.

  • The drawer of a cheque or bill

The main difference between a cheque and a bill is that the former is always drawn on and is payable by a banker specified therein, whereas a bill of exchange may be drawn on any person, firm or company. Thus only a customer of a bank having a current or a savings bank account is entitled to draw a cheque on his bank, i.e., the particular branch of a bank where he has opened his bank account. The name and address of the drawer bank are specifically printed on the cheque form. A seller generally draws a bill of exchange on his customer, or by a creditor on his debtor. Sometimes accommodation bills are also drawn to help a familiar party.

The amount of the instrument must be certain

The order of the drawer of a cheque or a bill and the promise by the writer of a promissory note must be to pay a certain sum of money to be paid must be certain and specified both in words and figures. In most cases its stated that the sum must be certain although-

It includes future interest, or

It is payable at an indicated rate of exchange, or

It is according to the course of exchange,

The instrument provides that on default of payment of an instalment, the balance unpaid shall become due.

The amount may be mentioned in a foreign currency as well, provided the rate of conversion of the domestic currency into foreign currency is stated by the drawer or is left to be decided according to the market conditions.

The instalment must be payable either ‘to order’ or ‘to bearer’


1º Payable to order

A promissory note, bill of exchange or cheque is payable to order if it is expressed to be so payable or if it is expressed to be payable to a particular person and does not contain words which prohibit its transfer or which indicate an intention that it shall not be transferable. For example, if a cheque is drawn as “ pay to be transferable”. For example, if a cheque is drawn to Madam Lal” its payment may be made to Madam Lal or any other person as per his order. The cheque can be endorsed, even if it does not contain the words “ or order”. But if the cheque is drawn as “ pay to Madam Lal only” shows the intention of the drawer to restrict its further transfer. Such a cheque shall be payable to Madam Lal only.

If a negotiable instrument, either originally or by endorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option. For example, if a bill of exchange is expressed as ‘ pay to the order of Ghanshyam or order’, it is still payable to Ghanshyam or if he so chooses to the person specified by him.2ºPayable to bearer

 A promissory note, bill of exchange or cheque may be payable to bearer

If it is expressed to be so payable, or if the only or the last endorsement is an endorsement in blank. This means a cheque payable to ‘to order’ becomes a bearer cheque if it is endorsed in blank.

If the word ‘bearer’ printed on a cheque form is scored off, it does not make the cheque nontransferable or non-negotiable, nor does it render it payable only to the payee. Such a cheque remains payable to order and is negotiable as such.

The payee must be a certain person

The person to whom payment of the instrument is to be made must be certain. The payee is considered as certain person for this purpose even if he is misnamed or designated by description only. The term ‘person’ includes, besides individuals, bodies corporate, local authorities, societies and associations of persons, etc., and cheques may be drawn payable to the Registrar, principal, director, secretary etc., of these institutions.

  • The payee may be more than one person

A negotiable instrument may be made payable to two or more payees jointly or it may be made payable in the alternative to one of two or more or one of some of several payees. For example, a cheque may be payable to;

Ram and Hari


Ram or Hari

In both these cases, it is payable to a certain person.

viii) The time of payment

A cheque is always payable on demand, though words to this effect are not mentioned therein. A bill may be payable at sight or after a period of time specified therein. A promissory note or a bill of exchange in which no time for payment is specified is payable on demand. If a bill is payable after a certain period it must be accepted by a drawee. But no such acceptance is necessary in case of a cheque. If a cheque is a post-dated cheque, it does not constitute an order to the banker till the date specified therein approaches. Banks do not make payment of such cheques before the date given in the cheque.

  1. ix) Signature of the drawer or promissor

A negotiable instrument is valid only it if bears the signature of the drawer/promissor. In case of a cheque, the signature of the drawer must tally with his specimen signature given to the banker at the time of opening his account. x) Delivery of the instrument is essential


A promissory note, bill of exchange and  cheque is a negotiable instrument. The making, acceptance or endorsement of such an instrument is completed by delivery. This means that a negotiable instrument is deemed to have been drawn, when it is written by the person concerned and delivered to the other party to whom it is meant. Delivery may be either actual or constructive.


  1. xi) Stamping of promissory notes and bills of exchange is necessary

Some systems require that the promissory note and the bills of exchange must be stamped. This is not required in case of a cheque.  The value of stamp depends upon the value of the note or the bill and whether it is payable on demand or at a future date. A note or bill without stamp cannot be admitted in evidence. It may be stamped either before or at the time of its execution.

lº Transferability and negotiability

Transferability is a characteristic of any property. It also gives a right to the possessor of the property to transfer it to anyone with or without consideration, provided he can establish that he is a true owner and in that capacity he has exercised his right of transfer.

Negotiability is a characteristic of any property. It gives a right to the possessor of the property to transfer it to any body but for consideration. Here the negotiator is not required to establish his credentials. It is the negotiator who has to accept the property in good faith.

2º Differences between Transferability and negotiability

Transferability and negotiability are not the same. They convey different meanings. The followings are the differences between the two:

  • – Transferability is the part of negotiability. Negotiation without transfer either by simple delivery or by endorsement stands meaningless. Transferability, as a characteristic, is complete in itself. It is only exchange of hand, which is an act and which needs performance.
  • – Negotiation is an expression of faith and confidence. Transfer, on the other hand, is a process.
  • – Negotiation parts faith in other rights and thus even if the owner is not having a good title it does not affect the rights and title of the negotiation. Transfer is exchange of hands. Here possession is transferred. Transferability rights need a lawful and unchallengeable title.

‘Not Negotiable’ marked documents lose all essential features of negotiability. ‘Not transferable’ marked documents can also be transferred to the person whose name is mentioned therein.

SECTION 2. Distinct characteristics of negotiable instruments

In most cases an instrument may be negotiable either by Statute or by usage.

Five characteristics are to be considered as necessary to constitute a negotiable instrument, instrument of payment or credit.



It refers to the ability to transfer entitlements under the negotiable instrument from one person to another in such a manner to constitute from the transferor a holder of the negotiable instrument.  Negotiability, therefore, allows for more simplified and easy circulation.  It has the advantage of security in the sense that the rights of the holder are not dependent on the transferor once the instrument is negotiated.  As we examine specific types of negotiable instruments, we will discover that the law distinguishes between various types of negotiability.  For example, a bill of exchange payable to bearer is negotiated by mere delivery, whereas a bill of exchange payable to order is negotiated by endorsement of the holder of the bill and completed by delivery.

Monetary value

Negotiable instruments contain a continued commitment by the issuer to pay the stipulated sum of money.  A simple statement of an object of a specified monetary value is not enough to render a document a negotiable instrument.

Commitment to pay

Negotiable instruments contain a continued commitment by the issuer to pay the stipulated sum of money.  A simple transfer of credit payable to holder is not enough if the issuer does not guarantee payment

Short-term title

In order to facilitate a simple exchange of title, the credit stipulated in the negotiable instrument must cover an easily obtainable and transferable payment.  Long-term titles seem to complicate such an easy transfer.  There are however, no hard and fast rules as to what constitutes a short-term title.  The fact that the bank sets dates within which a cheque is to be cashed, is not to be taken as a measurement criterion in this regard.

Usage and collection of title in payment

One of the consequences of negotiability is that negotiable instruments can be used and explained in a similar to that of ordinary money. The title to some or most negotiable instruments include most of the foregoing requirements.  The prime example is that of a bill of exchange (lettre de change) which may be defined as “an unconditional order in writing, addressed by one person to another, signed by the person giving it, “requiring the person to whom it is addressed to pay on demand or at fixed or determinable future time a sum certain in money to or to the other of a specified person, or to bearer.”

Another example of a negotiable instrument is that of a promissory note (billet à ordre) which is a written document by virtue of which the drawer undertakes the obligation (promises) to pay to the order of the beneficiary a sum of money at a prescribed date.  The same qualifications can be found in a warrant which is a promissory note guaranteed by one person on the merchandises deposited with a store.

There are number of possibilities as to the types of financial documents which might qualify as negotiable instruments.  To distinguish which is clearly part of these instruments, the three main characteristics, identified earlier, must be maintained: negotiability, a prescribed sum, and a commitment to pay.

The cheque, not recognized as a negotiable instrument under Rwandan law, resembles a bill of exchange in a number of ways, as we will notice it in the following examination of the rule governing cheques.  The main distinguishing characteristic of the cheque is that it is drawn on a bank and payable on order.  The other distinction between the cheque and a bill of exchange relates to the type of law governing both.  Unlike most jurisdictions, Rwandan legislature has opted for two separate laws to govern cheques and negotiable instruments.  The doctrine, however, does not seem to maintain such a distinction

It’s also important to note that the followings are presumptions related to negotiable instruments:


Every negotiable instrument shall be presumed to have been made or drawn for consideration, and that every such instrument when it has been accepted, endorsed, negotiated or transferred was accepted, endorsed or transferred for consideration. In Shanmuga Rajeswara Sethupathi versus Chidamabaram Chettiar 1938 (India), it was held that where a promissory note had been given, consideration should be presumed and that the burden of proving that no consideration passed was upon the maker of the promissory note.


Every negotiable instrument bearing a date is presumed to have been made or drawn on such date.

Time of acceptance

Every accepted bill of exchange is presumed to have been accepted within a reasonable time after its date and before its maturity. d) Time of transfer

Every transfer of negotiable instrument is taken to have been made before its maturity. e) Order of endorsement

The endorsements appearing upon a negotiable instrument are presumed to have been made in the order in which they appear thereon. f) Stamp

It is presumed that a lost promissory note, bill of exchange or cheque was duly stamped.

 Holder in due course


It is again presumed that a holder of a negotiable instrument is holder in due course. However, where the instrument has been obtained from its lawful owner or from any person in lawful custody thereof, by means of an offence or fraud, or has been obtained from the maker or acceptor thereof by means of an offence or fraud, or for unlawful consideration, the burden of proving that the holder is a holder in due course lies upon him.


Distinction between promissory note and bill of exchange


Promissory note differs from a bill of exchange in the following respects:

Bill of Exchange Promissory Note Cheque
There are three parties the drawer, the drawee and the payee- although only one and the same person may fill two of these capacities. There are only two parties the maker

(debtor) and the payee


Three parties (the drawer, the drawee which is a bank and the beneficiary)
It contains an unconditional order to the drawee to pay according to the drawer’s A note contains an unconditional promise by the maker to pay the payee. Unconditional order to pay the beneficiary
 The drawee or his agent must accept a bill payable after sight before it is presented for payment. No prior acceptance is needed Not only is Acceptance is not needed, but also the cheque is not entitled to days of grace
The liability of the drawer is secondary and conditional upon nonpayment by the drawee. The liability of the maker or drawer is primary and absolute. The liability of the maker or drawer is primary and absolute.
Notice of dishonour must be given by the holder to the drawer and the immediate endorsers to hold them liable thereon. No notice of dishonour need be given Notice of dishonour is not necessary. The parties thereon remain liable, even if no notice of dishonour is given.
The maker or drawer does not stand in immediate relation with the acceptor or drawee. The maker of the note stands in immediate

relation with the payee

The maker or drawer does not always stand in immediate relation with the drawee.



A cheque is a certified title by which a person called a drawer calls upon a banker (drawee) or any other institution authorized to carry out banking activities to pay to another person called a beneficiary (payee), a specified sum of money either to the beneficiary, to his order, or to bearer. Note that the cheque is always payable on demand or upon presentation.

A drawer is the person who draws/creates the cheque and is a creditor of the drawee. The drawee is the person on whom the cheque is drawn, i.e., the one supposed to effect payment. The payee is the person for whose benefit the cheque is drawn, that is why he is regarded as the beneficiary.

The relationship between the two is contractual in nature. It is a debtor and creditor relationship whereby the creditor who is the drawer (customer) is obliged to deposit money with his banker (drawee) who has the duty to repay the money upon demand by virtue of cheques drawn by the customer. Therefore, the drawer must fulfil his obligation so as to make it obligatory for the drawee to pay when asked to do so.


There are six requisites (important elements) to be present when one is creating a cheque. The cheque must contain the following: the word cheque in both text and title, an order to pay a specified sum of money, the person to be paid (payee) place of payment, date and place of drawing and lastly the signature of the drawer.

The fact that the word cheque must be evident in both text and title implies that if a bill contains all the requirements for a cheque but is not headed cheque then the bill is not a cheque and vice versa. Note that the title refers to the heading while the text refers to the content of the cheque.

Although one of the requisites of a cheque is that the payee must be mentioned, this is not always the case given that the same law recognizes bearer cheques.

The essence of date of drawing seems to be to assist in the computation of time within which the cheque must be presented for payment which is 60 days for cheques drawn in Rwanda and 120 days for cheques drawn abroad payable in Rwanda.

The drawer’s signature is very important. A drawer becomes liable when he signs and delivers the cheques. However, the signature may be replaced by an authentic declaration certifying the willingness and capacity of the drawer. For a drawer to incur liability on the cheque, he must have the capacity to contract.


There are two important requirements of with regards to requirements of substance.

-The first is the existence of disposable funds and the second is the existence of a drawee. Who disposes of the funds upon the drawers order.

Before drawing a cheque, the drawer must ensure that he has enough funds in his account except where there is an agreed overdraft. Rwandan law does not recognize post-dated cheques. As such, the moment a cheque is drawn, the payee has the right to present it for payment at any time provided the time period for presentation for payment has not elapsed.

-Second, the drawee is always a banker or an institution authorised to handle operations involving cheques and who must be designated on the cheque and his duty is to honour the customer’s cheque up to the amount of his credit balance or agreed overdraft if any. Should the bank dishonour the cheque, the holder cannot sue the drawee (bank) on the cheque, since there is no privacy of contract (no contractual link) between them. However, he may sue the drawer or subsequent endorsers.

Note that a cheque drawn on an institution other than one authorized to carry out banking services is an invalid cheque.


Three types of cheques are recognized under Rwandan law. The determination of the form depends on how the beneficiary is indicated in the cheque. A drawn to named person with the clause ″to the order″, to a name.          

  • a) A cheque payable to named person with or without clause to order This kind of cheque may take three different forms.
  • It may be pay x or order, pay x, or pay to the order of x. This implies that x may negotiate the cheque to someone else by endorsement.

This type of cheque has advantages over the others. Compared to a cheque payable to a named person with clausenot to order” it can be transferred by simple endorsement and delivery, whereas the other one cannot be transferred. It is at the same time safer than the bearer cheque. Anyone in possession of a bearer cheque holds a good title and has the power to negotiate it. As regards the order cheque, only the named person has a good title and is the only one who can endorse it. Therefore, in case of loss or theft, the true holder of an order cheque holds a better title.

Cheque payable to a named person with clause “not to order”

This kind of cheque can only be presented for payment by the person whose name is indicated on the cheque. The holder of such a cheque cannot transfer it because it is nonnegotiable in form. However this cheque may be endorsed by a drawee and this is only done in case the drawee owns several establishments such that he draws a cheque to one and endorses it to another.

The advantage of this cheque lies in the fact that whereas a cheque payable to a named person may be stolen since it is transferable, this kind of cheque cannot be of any use to someone who may steal it or one who may find it in case of loss because the drawee does not verify the signature but the identity of the holder. c) Cheque drawn payable to Bearer

This kind of cheque is either drawn with an indication “payable to bearer” or it may be left blank.  The holder of such a cheque may either cash it or negotiate it to someone else.  Negotiation may be by simply transferring (simple delivery) the cheque to another person in which case it remains a bearer cheque or it may indicate the name of the person by endorsement, which changes the cheque to an order cheque.


The drawer is the guarantor of payment.  A guarantor is a person who promises to pay for something if the person who should pay does not.  By virtue of drawing and issuing the cheque the drawer becomes firstly liable as guarantor of payment.  However, there are also secondary guarantors of payment who are endorsers.


Negotiation is the transfer of a negotiable instrument (cheque) in such a form that the transferee becomes a holder.  A holder is a person in possession of a cheque that is properly endorsed to him, i.e., meets all the legal requirements for endorsement.

Note that only a cheque payable to order or to bearer is negotiable.  While an order cheque may be negotiable by endorsement, a bearer cheque may be negotiated by simple delivery.

Endorsement may designate the transferee. When it does not designate the transferee, it is referred to as endorsement in blank.

Endorsement may be made on the back of a cheque or on a separate sheet attached to the cheque (this is usually done where there are several endorsements on the back of the cheque and there is no space left for further endorsements.

The law provides that the cheque is payable upon presentation or demand.  A cheque presented for payment before the date of issue is payable on the day of presentation.  In other words, the date on which the cheque is presented is deemed to be the date of payment.  It follows that from the date the cheque is issued it may be presented for payment immediately or at a future date regardless of whether it is post-dated, undated or antedated.

For a cheque issued and payable in Rwanda, presentation for payment should be done within 60 days while cheques issued abroad but payable in Rwanda should be presented within 120 days.  After the expiry of this period, if the cheque is presented for payment and it is dishonoured, the bearer of the cheque may not have recourse against the drawer on the cheque, although he may sue him on the original debt.

The amount specified on the cheque must always be indicated in both letters and figures and in case of any discrepancy between the two, the amount in letters shall be presumed to be payable.  In practice cheques with differing amounts in letters and figures are returned unpaid.

Furthermore, where there are several amounts denoted on the cheque, the lesser amount shall be the one payable.  The rationale being to forestall alterations that may be made on the cheque before, if one is ever going to alter the amount specified on the cheque, he/she would have to put an amount that is greater than the original one.  The provision is to protect the drawer.

It is the duty of the banker who pays an endorsed cheque to examine the regularity of the endorsement, but not to establish that the signatures are correct.  The drawee is also required to verify the dates of payment to ascertain if the time allowed for presentation for payment has not expired, and if it has expired, if no revocation or opposition to payment has been made.

In case of a cheque drawn to bearer, without any endorsements, the drawee will examine the drawer’s signature and the amount specified to confirm that there are no alterations or forgeries done.  With respect to a cheque payable to named person, the drawee will verify the identity of the payee in addition to what has been mentioned above.

Crossing is a special restriction on the payment of the cheque, which is usually effected by drawing two parallel lines across the cheque. The implication is that the cheque must not be paid across the counter.

This special restriction on payment takes two forms, i.e., there are two kinds of crossing: general crossing and special crossing. It is general crossing when two parallel lines are drawn across the cheque with nothing mentioned. General crossing implies the cheque in question can only be paid through a bank account and not across the counter. Special crossing is when a specific bank is named between the parallel lines. The implication is that the cheque must be paid to the banker named in the crossing.

General and special crossing give additional protection to the holder in case of theft, for the thief may not have a bank account and even if he has, the time involved in clearing the cheque enable the drawer to stop payment. In addition it is easier to trace the thief.

A general crossing may be transformed into a special crossing but the converse does not apply. It should be noted that if the banker fails to observe the crossing, the banker is liable to the drawer for any loss suffered by the drawer.

Default of payment may be defined as absence of payment implying the cheque is not paid upon presentation and yet it fulfils all the legal requirements and is presented within the period allowed by law.  Usually there is default of payment when the drawer does not have sufficient funds on his account.  Sometimes, there is wrongful dishonour and this is when the drawee by mistake refuses to pay a cheque drawn on him by his customer when the funds are available.

The effect of default of payment is that the holder may seek redress against the drawer and subsequent endorsers either jointly or severally.  The holder’s redress may be one of protest and attachment or seizure of moveable properties.


A protest is a formal statement in writing made at the request of a holder of a cheque, in which it is declared that the cheque was on a certain day presented for payment, and that such payment was refused, and stating the reasons, if any, given for such refusal.  For this right (right of protest) to accrue to the bearer of an unpaid cheque, the bearer must have contested non payment in one of three ways: by notarial act (i.e. the statement in writing be made under the hand and seal of a notary (protest), Declaration by the drawee (banker) dated and written on the cheque indicating date of presentation,  Declaration by a clearing-house (NBR) stating that the cheque was presented with the time allowed by law and that it was returned unpaid.

Note that a protest is made on the cheque itself or on a separate sheet attached to the cheque and must be delivered to the parties concerned. The rationale is to give either the drawer or drawee time to cure the mistake as the case may be.

The protest is required to be made within the time for presentation of the cheque for payment.  However if presentation is made on the last day within this period, the time is extended to the next working day.  However, if there is delay in making a protest, the time may be extended by the courts provided the plaintiff could establish exceptional circumstances.

As regards the place where the protest is to be made, the place shall be the location of the bank where the cheque is payable.

The holder of an unpaid cheque is required to give notice of default of payment to the drawer and/or subsequent endorsers within four working days from the date the protest or declaration was (re-)established.  Similarly, the drawer or endorser who has been given notice is required to notify the rest or the next endorser or drawer within two working days from the date he was notified.

Conservatory attachment is the act or process of seizing a person’s property by virtue of a judicial (court) order, and bringing the same into the custody of the court, for the purpose of securing a debt or claim of the creditor in the event where judgment is rendered.  This act will prevent the owner from disposing of the property in anticipation of its judicial sale.

The unpaid bearer may attach the property (moveable) of the drawer and endorsers by obtaining an order of the court of first instance of the place where the property is located.  Note that this remedy is available only to the bearer of an unpaid cheque who has protested default of payment.  However, the property can be sold after a judgment in execution has been passed authoring the judicial sale of the property.  The bearer of an unpaid cheque who seizes the property of the drawer or endorsers acquires a privilege over other creditors of the owner.

While the drawer and the endorsers are individually and collectively liable to the bearer of an unpaid cheque, the banker is liable to the drawer in case of wrongful dishonour.

The bearer may claim from the person he has sought redress: the amount specified in the cheque, interest from the date of presentation calculated at 6%, fees of protest or declaration and the expenses of giving notices and a commission of 1/3 of the original sum, in case it is justified, in the absence of any agreement to the contrary.

Opposition of payment implies stopping payment.  It is usually done by the drawer of the cheque informing the drawee that the cheque in question should not be paid upon presentation.  Opposition is required to be made by registered letter.

Opposition can be allowed if the cheque is lost, if its title is obtained fraudulently, or if the bearer has been declared bankrupt or incapacitated.

When a drawer bank does certify a cheque, it substitutes its undertaking to pay the cheque and becomes primarily liable for payment of the cheque. At the time a cheque is certified, the bank usually debits the customer’s account for the amount of the bank. It also adds its signature to the cheque to show that it has accepted primary liability for paying it. The bank’s signature must appear on the cheque.

The bearer of an unpaid cheque has a time of six (6) months in which to institute an action in court against the drawer and endorsers.  Computation of time starts from the date of expiry of the time allowed for the presentation of the cheque for payment. Actions by persons obliged by the cheque against one another, that is, drawers and endorsers are also valid within six mouths.

Issuing cheque without sufficient funds to cover the cheque constitutes a crime punishable under Art. 435 PC by imprisonment of 3 months to 5 years and or a fine of up to 300.000 Frw.

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