Crossing of negotiable instruments is a risk management practice used to enhance the security and control of negotiable instruments, particularly checks. Crossing involves drawing two parallel lines across the face of the check, either vertically or horizontally, accompanied by certain specified words or abbreviations. Here’s an overview of crossing of negotiable instruments:
Purpose of Crossing:
- Security:
- Crossing enhances the security of negotiable instruments by restricting the negotiability of the instrument, making it more difficult for unauthorized persons to negotiate or cash the instrument.
- Control:
- Crossing provides a means of directing the proceeds of the instrument to a specific bank or branch, facilitating the control and tracking of payments and transactions.
Types of Crossing:
- General Crossing:
- A general crossing involves drawing two parallel lines across the face of the check without any additional words or specifications. The presence of the crossing indicates that the check should be paid through a bank and not be paid over the counter in cash.
- Special Crossing:
- A special crossing involves drawing two parallel lines across the face of the check accompanied by the name of a specific bank or branch. The check can only be paid through the specified bank or branch, providing an additional layer of security and control.
- Restrictive Crossing:
- A restrictive crossing involves drawing two parallel lines across the face of the check accompanied by the words “Account Payee” or “Not Negotiable.” The presence of the restrictive crossing restricts the negotiability of the check, indicating that the check should be deposited into the account of the payee and not be negotiated further.
Legal Implications:
- Liability of Banks:
- Banks are generally required to comply with the crossing instructions on negotiable instruments. Failure to comply with the crossing instructions may result in liability for the bank, including potential claims for unauthorized payment or negligence.
- Liability of Parties:
- Parties who alter, counterfeit, or misuse crossed negotiable instruments may be subject to legal penalties, including criminal prosecution and civil liabilities for fraud, forgery, or unauthorized use of the instrument.
- Enforcement and Remedies:
- Crossed negotiable instruments are subject to the laws, regulations, and enforcement mechanisms governing negotiable instruments in the jurisdiction where the instrument is issued, negotiated, or enforced. Parties should be aware of their rights, obligations, and potential remedies in relation to crossed negotiable instruments under applicable laws and regulations.
 crossing of negotiable instruments is a risk management and control practice that enhances the security and control of negotiable instruments, particularly checks. It restricts the negotiability of the instrument, directs the payment to a specific bank or branch, and facilitates the tracking and control of payments and transactions. Proper understanding, compliance with crossing instructions, and adherence to legal requirements are essential for ensuring the validity, enforceability, and effectiveness of crossed negotiable instruments in commercial transactions.