​Malaysian Negotiable Instruments –Crossing of Cheques

​Types of Crossing
Crossing a cheque is one of the most important methods of protecting negotiable instruments against fraud, theft and wrongful payment. A crossing does not invalidate the cheque, nor does it prevent the cheque from being negotiated. Instead, it regulates how the cheque is paid, through which bank it should be collected, and in certain cases the legal quality of the title transferred.
The four most common types of crossing are:

1. General Crossing
2. Special Crossing
3. "Not Negotiable" Crossing
4. "Not Negotiable" Together with a Special Crossing

General Crossing
Definition
A General Crossing is the simplest form of crossing. It consists of two parallel lines drawn across the face of the cheque, with or without additional words.

How to Identify It
A General Crossing normally appears as:
---------------------------- || || ----------------------------
or simply as two parallel lines across the cheque without any words.

Legal Effect
A General Crossing does not affect the validity of the cheque.
Instead, it provides additional protection by requiring that:

• the cheque should normally be collected through a bank;
• it should not ordinarily be freely cashed over the bank counter;
• payment is recorded through the banking system; and
• the risk of fraud or theft is reduced.

Why Does the Law Allow General Crossing?
The law encourages the use of General Crossing because it creates a clear banking record of payment.
Instead of handing cash directly to whoever presents the cheque, payment is made through a bank account, making the transaction easier to trace.

Practical ExampleAli issues a cheque payable to Ahmad.
Before delivering the cheque, Ali draws two parallel lines across its face.
Ahmad deposits the cheque into his bank account.
The cheque is processed through the banking system instead of being freely cashed over the counter.

Examination PointRemember:
A General Crossing regulates how the cheque is paid, not who owns the cheque.

2.1.2 Special CrossingDefinitionA Special Crossing consists of two parallel lines together with the name of a specific bank.

How to Identify ItExample:
----------------------------------- || MAYBANK BERHAD || ----------------------------------- Other examples include:
----------------------------------- || CIMB BANK BERHAD || -----------------------------------
----------------------------------- || PUBLIC BANK BERHAD || -----------------------------------

Legal Effect
A Special Crossing does not invalidate the cheque.
Instead:

• the cheque should normally be collected through the bank named in the crossing;
• it provides greater protection than a General Crossing;
• it reduces the possibility of wrongful payment; and
• it creates a more secure banking trail.

Why Does the Law Allow Special Crossing?The law allows a specific bank to be named so that collection occurs through a particular banking institution.
This provides greater certainty and security, especially for high-value commercial transactions.

Practical Example
Ali issues a cheque crossed:
|| MAYBANK BERHAD ||
Ahmad cannot simply present the cheque anywhere expecting unrestricted payment.
Instead, the cheque should be processed through Maybank Berhad, the bank named in the crossing.

Examination PointRemember:
A Special Crossing controls which bank should collect the cheque, not who owns it.

2.1.3 "Not Negotiable" CrossingDefinitionA "Not Negotiable" Crossing is a crossing containing the words:
NOT NEGOTIABLE
It is one of the most misunderstood concepts in negotiable instruments law.

How to Identify ItExample:
----------------------------------- || NOT NEGOTIABLE || -----------------------------------
Sometimes it appears together with a bank name:
--------------------------------------------- || MAYBANK BERHAD ||
                                                                    || NOT NEGOTIABLE || ---------------------------------------------
Legal EffectMany students mistakenly believe that:
"Not Negotiable" means the cheque cannot be transferred.
This is incorrect.
The cheque may still be transferred.
For example:

• A bearer cheque is still transferred by delivery.
• An order cheque is still transferred by endorsement and delivery.

The only legal effect is that:
The transferee cannot obtain a better title than the transferor.

Meaning of "Not Negotiable"These words do not prohibit transfer.
Instead, they affect the legal quality of ownership.
If the person transferring the cheque has defective ownership,
every later holder receives the same defective ownership.
No later holder can improve the title.

Why Does the Law Allow a "Not Negotiable" Crossing?
The purpose is to protect the true owner of the cheque.
Without this protection, an innocent holder may, in certain circumstances, acquire better legal rights than the transferor.
The "Not Negotiable" crossing prevents this from happening.

Practical Example
Ali owns a cheque crossed:
|| NOT NEGOTIABLE ||
Ahmad steals the cheque.
Ahmad transfers it to Siti.
Siti honestly believes Ahmad owns the cheque.
Legal Position
Although Siti acted honestly,
she receives the same defective title that Ahmad possessed.
She cannot obtain better legal ownership than Ahmad.

Examination Point
Remember:
"Not Negotiable" controls the quality of legal ownership, not the ability to transfer the cheque.

2.1.4 "Not Negotiable" Together with a Special CrossingDefinitionA cheque may contain both:

• a Special Crossing; and
• the words "Not Negotiable."

How to Identify It
Example:
------------ || MAYBANK BERHAD || || NOT NEGOTIABLE || ----------------

Legal Effect
This crossing combines two separate legal protections.
First Protection
The cheque should normally be collected through Maybank Berhad, the bank named in the crossing.

Second Protection
Even if the cheque is lawfully transferred,
the transferee cannot obtain a better title than the transferor.

Why Is This Combination Used?It provides both:

• banking security; and
• legal protection against defective title.

Consequently, it offers greater commercial protection than using either crossing on its own.

Practical Example
Ali issues a cheque crossed:
|| MAYBANK BERHAD ||
|| NOT NEGOTIABLE ||
Bina Jaya deposits the cheque through Maybank.
Later, it endorses the cheque to another company.
If Bina Jaya had defective title,
the later holder cannot acquire better title,
even though the cheque continues to be transferable.

Examination Point
Remember:
A Special Crossing controls which bank should collect the cheque.
A "Not Negotiable" Crossing controls the legal quality of ownership.
Together, they protect both the banking process and the ownership rights.

Quick Revision Summary
General CrossingPurpose
Controls how the cheque is paid.
Memory Tip
"Pay through a bank."

Special Crossing
Purpose
Controls which bank should collect the cheque.
Memory Tip
"Collect through the named bank."

"Not Negotiable"
Purpose
Controls the legal quality of ownership.
Memory Tip
"Transfer is allowed, but ownership cannot become better."

Special Crossing + "Not Negotiable"
Purpose
Provides both banking protection and ownership protection.
Memory Tip
"Correct bank + No better title."

Key Examination Principle
When analysing any crossed cheque, always ask these questions:

1. What type of crossing is on the cheque?
2. Does the crossing regulate payment, ownership, or both?
3. Can the cheque still be transferred?
4. If transferred, does the transferee acquire good title or merely the same title as the transferor?