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Section 130: Cheque bearing not negotiable

Negotiable Instruments Act • Official Statutory Text & Practice Guide

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Act 1881
Section 129 All 148 Sections of Negotiable Instruments Act Section 131

Legal Commentary & Landmark Judgments: Section 130

Section 130 defines the effect of the words 'not negotiable' on a crossed cheque, enacting that a person taking such a cheque shall not have, and shall not be capable of giving, a better title to the cheque than that which the person from whom they took it had.

  • Destruction of Holder in Due Course Immunities: A 'not negotiable' crossing completely eliminates the doctrine of holder in due course; the paper remains transferable, but no longer negotiable in the legal sense.
  • Nemo Dat Quod Non Habet: Subject to the strict rule of property: no person can transfer a better title than they possess; if stolen, every subsequent holder acquires zero title.
  • Maximum Commercial Safety: Protects the drawer against lost or stolen cheques being enforced by third-party discounting houses or holders for value.
Key Landmark Precedents:
  • Great Western Railway Co. v. London & County Banking Co. [1901] AC 414: The landmark House of Lords decision holding that 'not negotiable' does not prohibit transfer, but deprives the transferee of the power to acquire a clean title free from prior defects.
  • Fisher v. Roberts (1890) 6 TLR 354: Affirmed that whoever takes a cheque crossed 'not negotiable' takes it at their own risk regarding the title of the transferor.
Courtroom Practice & Strategic Litigation Guidance:

When issuing cheques by post or for high-value corporate transactions, always add the words 'Not Negotiable' between the crossing lines. Under Section 130, if the cheque is intercepted by a rogue or thief, no third party or bank can ever claim to be a holder in due course against your client.

Section 129 All 148 Sections of Negotiable Instruments Act Section 131