Cheque and Features

 Meaning of Cheque

According to the negotiable instruments act 1881, section 6, “ a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.” It is an important document for any transaction in the business world. Thus, a cheque is a bill of exchange with two distinctive features namely-

1)     It is always drawn on a bank

2)     It is always payable on demand

Features of a Cheque

1.     A cheque is printed paper

2.     On the printed paper it specifies the bank and branch address

3.     It must be in writing

4.     A cheque is always drawn on a banker

5.     A cheque can only be drawn payable on demand

6.     It must have a date

7.     Cheque no is also exist

8.     It must contain an order to pay

9.     It includes an account no of owner of the account holder

10.  The order to pay must be unconditional

11.  The sun payable must be certain

12.  A cheque must contain an order to pay money only

Parties to a Cheque 

1. Drawer. He is the person who draws the cheque, i.e., the depositor of money in the bank.

 2. Drawee. It is the drawer’s banker on whom the cheque has been drawn. 

3. Payee. He is the person who is entitled to receive the payment of the cheque. 

4. The holder, indorser and indorsee (the same as in the case of a bill or note). 

Distinction Between Bills of Exchange and Cheque

 1. A bill of exchange is usually drawn on some person or firm, while a cheque is always drawn on a bank. 

2. It is essential that a bill of exchange must be accepted before its payment can be claimed A cheque does not require any such acceptance. 

3. A cheque can only be drawn payable on demand, a bill may be also drawn payable on demand, or on the expiry of a certain period after date or sight.

 4. A grace of three days is allowed in the case of time bills while no grace is given in the case of a cheque. 

5. The drawer of the bill is discharged from his liability, if it is not presented for payment, but the drawer of a cheque is discharged only if he suffers any damage by delay in presenting the cheque for payment. 

6. Notice of dishonour of a bill is necessary, but no such notice is necessary in the case of cheque. 

7. A cheque may be crossed, but not needed in the case of bill. 

8. A bill of exchange must be properly stamped, while a cheque does not require any stamp. 

9. A cheque drawn to bearer payable on demand shall be valid but a bill payable on demand can never be drawn to bearer.