Judge Fateh Hamarshe
Judge and Part-Time Lecturer
Faculty of Law and Public Administration
Birzeit University, Palestine

Abstract:

This research paper deals with the relationship of the bank’s cheque endorsement with the current account, based on the provisions of Trade Law No. 12 of 1966, in force in the West Bank of Palestine, and based on the provisions of both the royal endorsement and the power of attorney, the provisions related to the current account, and the principles on which it is based. The paper addresses the problem of the lack of distinction between the ownership endorsement and the bank’s power of attorney endorsement, by the opener of the current account, and in arranging the same effects on both endorsements, despite the differences in the provisions of each. The Ramallah Court of Appeal issued a ruling stating that “endorsing cheques when depositing them in the account does not apply to the provisions of endorsement stipulated in the Trade Law, since the basic principle of endorsement is that it should be proprietary, and if the endorsement is proxy, it is not so unless it is explicit.” The basic principle of cheques deposited in the customer’s account with the bank is that they are a deposit, and the bank is obligated to return their value if they are collected, or to return them in kind if their value is not collected.
To address this problem, the study relied on the analytical approach by clarifying the legal texts regulating the endorsement of cheques, and those regulating the current account, and the relationship between them. The study included two main axes: the first related to the endorsement of cheques in the current account, an endorsement transferring ownership, and the legal effects resulting from this endorsement for the bank and the customer, either when cashing the value of the cheque, or when returning the cheque without cashing. The second relates to the endorsement of the cheque by the opener of the current account as a proxy endorsement, and the legal effects resulting from this endorsement, whether when the value of the cheque is received, or when the cheque is returned without cashing.
The study concluded that the basic principle of the endorsement is that it is proprietary, and in it the value of the cheque is not recorded as paid in the current account unless both parties agree to that, and when the value of the cheque is not cashed, the bank has the right to file a cash suit, or make a reverse entry in deviance from the principle of replenishment in the current account, keeping the cheque as security for the outcome of the current account after it is closed, unless there is an agreement to the contrary. In the case of a proxy endorsement, the provisions of the deposit contract and the agency contract apply to this relationship, and the value of the cheque is recorded as paid in the current account after collecting it as a document for the agency contract. The study recommended the need to oblige banks, through the Monetary Authority, to undertake the duty of informing customers and explaining to them when endorsing cheques, as well as the need to highlight conditions that violate the complementary rules contained in the Trade Law when signing the current account opening contract.

Key words: title endorsement, proxy endorsement, cheque, current account, and reverse entry.

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