Definition of Cheque

14-NOV-2014 11:43

    Section 6 of Negotiable Instruments Act 1881 states that “A cheque is a bill of exchange drawn on a specified banker, and not expressed to be payable otherwise than on demand”.

    A cheque is bill of exchange that has 2 more qualifications, specifically,

    (i) It is constantly drawn on a specified banker

    (ii) It is always payable on demand. As a result, all cheques are bills of exchange, but all bills are not cheques. A cheque must satisfy all the prerequisites of a bill of exchange; i.e., it must be signed by the drawer, & must enclose an unconditional order on a specified banker to pay a definite sum of money to or to the order of assured person or to the bearer of cheque. It does not entail acceptance.

    Difference between Bills of Exchange & Cheque

    1. A bill of exchange is typically drawn on some firm or person, while a cheque is always drawn on bank.
    2. It is necessary that a bill of exchange ought to be accepted before its payment can be claimed. A cheque does not necessitate any such acceptance.
    3. A cheque can only be drawn payable on demand; but a bill can also be drawn payable on demand, or on the termination of a certain period after sight or date.
    4. A grace of 3 days is allowed in case of time bills whereas no grace is given in case of cheque.
    5. The drawer of bill is released from his liability, if it not presented for payment, but drawer of a cheque is discharged provided that he suffers any damage by holdup in presenting the cheque for payment.
    6. Notice of dishonor of a bill is essential, but no such notice is needed in case of cheque.
    7. A cheque may be crossed, nevertheless not needed in the case of bill.
    8. A bill of exchange must be appropriately stamped, whereas a cheque does not need any stamp.
    9. A cheque drawn to bearer payable on demand shall be valid although a bill payable on demand can never be drawn to bearer
      Unlike cheques, the payment of bill can’t be counter-manded by the drawer.

     

    Source: http://www.ddegjust.ac.in/

    DISCLAIMER: JPL and its affiliates shall have no liability for any views, thoughts and comments expressed on this article.

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