The Church Treasurer's Handbook. Robert Leach

reasons explained below, stopping a cheque should only be done for a good reason. You stop a cheque by telephoning the bank and confirming your instructions in writing. You should normally contact the payee immediately after telling the bank and ask them to return the cheque to you. The bank will want to know why you wish to stop a cheque. The legal term for stopping a cheque is a ‘countermand’. The law is contained in Bills of Exchange Act 1882 s.75. The bank is under a duty to check that the countermand came from the customer, and not to countermand if there is any doubt.

      Legal status of cheques

      A cheque is legally defined as “a bill of exchange drawn on a banker payable on demand” (Bills of Exchange Act 1882 s73). It is an instruction to your bank to pay an amount to a person (usually to their bank account) from your funds with the bank.

      Cheques were first used in 1680, but became much more sophisticated during the 20th century with special forms, account names and numbers added, and optical character reading provided. Strictly speaking, there is no need to use a cheque book at all to issue a cheque. A cheque may legally be written on plain paper or indeed on any other surface. This is not recommended practice as it delays payment and can incur significant charges.

      A cheque may be crossed. This may be a general crossing or a special crossing. A cheque which is not crossed is said to be an open cheque.

      An open cheque is now very rare. It does not contain two parallel lines across the payee and amount. In effect it is a bearer bill with little more security than a bank note. Someone with an open cheque can walk into the bank and receive payment for the amount stated.

      A crossed cheque has two parallel lines either vertical or diagonally against the writing of the payee and amount. The lines may be printed or written. This means that the cheque can only be paid into a bank account, and not cashed unless the cheque is made out to “cash”. A crossed cheque must be paid into an account in the name of the payee unless negotiated, which means that the payee has written on the back “pay [another name]” and signed it. The cheque then becomes payable to the other name.

      A cheque may be specially crossed, by writing between the parallel lines either the name of a bank or a place (or both), meaning that the cheque can only be paid into an account at that bank or in that place.

      In practice, today most cheques are crossed with the words “account payee” written in the crossing. From 16 June 1992 this has legal effect in meaning that the cheque can only be paid into an account with the payee’s name; the cheque cannot be negotiated.

      Standing orders and direct debits

      Standing orders and direct debits are means by which regular payments are automatically made by the bank to or from your account. Either method may be set up in writing, by telephone or using the Internet.

      A church will usually receive regular payments by standing order from church members. It is most unlikely that a church will be allowed to receive funds by direct debit.

      A church may make payments by standing order, such as if supporting a missionary, renting property or leasing equipment. It may make payments by direct debit for telephone and electricity bills.

      A standing order is a regular payment of the same amount paid at regular intervals, such as on the 4th of each month, or every Friday, or on the first Monday of each quarter. A standing order may be paid into any account. If the amount of a standing order is to be changed, a new standing order must be arranged by the payer.

      A direct debit is a regular payment of a variable amount. This is ideal for services where the charge varies from period to period, such as for utility bills. Because you are allowing someone else to determine how much money they take from your account, direct debits are more strictly controlled than standing orders. The main points are: