On June 17, 2006, Mr. Cham wrote an order cheque of M. Sumarch for D500 drawn on Standard Chartered Bank, Bakau (a) State the drawer, the payee and the draw...

(a) The three parties to the cheque

• Drawer: Mr. Cham, the person who writes (draws) and signs the cheque and whose account is to be debited.
• Payee: M. Sumarch, the person to whom the money (D500) is to be paid.
• Drawee: Standard Chartered Bank, Bakau, the bank on which the cheque is drawn and which is ordered to pay.

(b) Four effects of the crossing "Account Payee Only" and "Not Negotiable"

1. The cheque cannot be cashed over the counter; it must be paid into a bank account, making it safer than an open cheque.
2. "Account Payee only" directs that the money be paid into the account of the named payee (M. Sumarch) alone, so it cannot properly be diverted to another person's account.
3. "Not Negotiable" means the cheque can still be transferred, but the transferee gets no better title than the person who transferred it; if the transferor's title is defective, the receiver also has a defective title.
4. It protects against theft and fraud, because a thief or finder cannot obtain valid ownership or safely pay it into his own account, and any loss can be traced.

(c) Three advantages of payment by cheque

1. Safety: It is safer than carrying large sums of cash, and a crossed cheque reduces the risk of loss or theft.
2. Convenience: Large amounts can be paid easily by writing a single cheque, without counting cash.
3. Proof of payment: The paid cheque (and counterfoil / bank statement) serves as documentary evidence that payment was made.

(Other points: it can be sent safely by post when crossed; payment can be stopped if necessary.)