Question 287. - A country bank asks a city branch by telephone if there are sufficient funds to the credit of a certain account to pay a cheque for a named amount. The reply is that there are sufficient funds and that they will be held for the cheque. Before the cheque reaches the drawee bank another cheque is presented on the same account and sufficient funds are not available for the latter if the funds are held as advised for the first cheque. Is the drawee bank compelled to honour cheque No. 1, or does cheque No. 2 have the prior right to payment?

Answer. - A cheque cannot be charged to a customer's account unless it is actually presented and, in the circumstances stated, cheque No. 2, presented between the answer being given to the inquiry regarding cheque No. 1 and its presentation, would take precedence and the drawee bank should honour it, but it would seem to have made itself liable on cheque No. 1 to the presenting bank.