Hesabu, an accountant of Speed Company Ltd, prepared a bearer cheque for Haraka‟s signature who was the duly authorized signatory. The amount appeared in figures as Sh. 2000, but the amount was not written in words. Haraka signed a cheque. Hesabu then altered the amount to read Sh. 20,000 and he indicated the amount in words, withdrew Shs. 20,000 from the company‟s account. Hesabu handed over Sh. 2000 to Haraka butpocketed the 18,000 being the difference between Sh. 20,000 and Sh. 2,000. Speed

• This problem is based on the obligations of the customer towards the banker.
• The customer is bound to exercise reasonable care when drawing cheques to avoid alteration.
• In this case Speed Company Ltd acted negligently in drawing the cheque and this facilitated the change by Hesabu.
• My advise to the bank is that it is not liable to credit the company‟s account as the company failed to observe its duty of care.
• This position is consistent with the decision in London Joint Stock Bank V. MaCMillan and Arthur whose facts were substantially similar.

Company Ltd has ascertained the true position and is insisting that the bank credit its account with the sum of Kshs. 18,000. Advise the bank.

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