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Delict — negligence — duty of care — negotiable instruments — cheque endorsed "a/c payee only" being received for collection on behalf of person other than payee — duty of care owed by bank to drawer of cheque.
When a cheque is restrictively endorsed with such words as "Account payee only", a collecting bank owes a duty to the drawer of the cheque to take reasonable care not to cause the latter financial loss by carelessly presenting a cheque for collection without also ensuring that its client is entitled to payment. When such a cheque is presented, the bank should be put on its guard to ensure that the proceeds of the cheque go to the nominated payee. It should foresee that loss may be occasioned to the drawer if the cheque were presented for payment by some person other than the named payee.
Rhostar (Pvt) Ltd v Netherlands Bank of Rhodesia Ltd 1972 RLR 56; 1972 (2) SA 703 (R) followed.
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