Negligence of collecting bank in collecting cheques payable to third parties :

The collecting bank has to make necessary enquiries before any third party cheques are collected on behalf of its customer. In Ross v. London County Westminster and Parrs Bank Ltd. [1919] 1 KB 678, cheques payable to “the Officer in charge, Estate Office, Canadian Overseas Military Force” were used by an individual to pay off his debts. There was an instruction in all the cheques that it was negotiable by the concerned officer. However, it was held that the fact that the cheques were drawn in favour of the Officer in charge should have put the banker on enquiry and since no such enquiry was made by the banker the bank is liable on the grounds of negligence.