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[QUOTE="Munyaradzi Mafaro, post: 40354, member: 636"]
Banks sometimes see special instructions written on checks. These instructions clearly indicate where the money should be allocated. When someone writes "account payee" on a check, they want the bank to put the money directly into one specific person's account. The person receiving the check cannot give it to someone else. This creates a direct path from the person writing the check to the person receiving the payment.

Laws about checks have changed over time. The Bills of Exchange Act of 1882 permitted individuals to transfer checks freely. Even with "account payee" written on them, people could still hand these checks to other people. The banks had to honor the checks, regardless of who presented them. This system operated reliably for many years without major issues.

The Cheques Act of 1992 made things different. This new law stopped people from passing around checks that have "account payee" written on them. Banks must follow these written instructions exactly. They cannot let anyone except the named person cash the check. The law removed the old freedom to transfer these marked checks.

This change protects people from having their checks stolen or misused. When someone writes "account payee" on a check, they know only the right person can use it. The money goes directly where it should go without any detours. Check writers have more control over their payments. The banking system became more secure for everyone involved.
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