Section 10 of NIA : Section 10: ''Payment In Due Course''

Explanation using Example

Imagine John issues a cheque to Alice for $500 for purchasing her old laptop. Alice presents the cheque to her bank for deposit. The bank, following standard procedures, checks the cheque for any signs of fraud or tampering and verifies that it matches the records (apparent tenor of the instrument). The bank finds nothing suspicious (acts in good faith and without negligence) and credits $500 to Alice's account. This is a "Payment in due course" as the bank made the payment to the person presenting the cheque (Alice), who is in possession of the cheque and there is no reason for the bank to believe that Alice is not entitled to the payment.