Cheque

The cheque is an important means of payment used widely for drawing money from the bank. It is used for paying a large sum of money. It is used by the buyer or debtor to pay the due amount of goods to his seller or creditor. It is a written order issued by the depositor to a particular bank. It is the direction given to the bank to pay a certain sum of money to a certain person or his order or to the bearer of the instrument. It is an unconditional order drawn upon a specified banker signed by the maker.

Characteristics of cheque

A cheque has the following characteristics: -

1. An unconditional order: The drawer or the depositor should not lay down any condition in the cheque.
2. Drawn upon a specified banker: The drawer issues cheque directing a particular bank to pay the amount of the cheque.
3. Signed by the depositor: The depositor should sign the cheque before issuing it.
4. Payable on demand: The bank must pay the amount of the cheque as soon as it is presented at its counter.
5. Payable either to a person or bearer: The amount of cheque is payable to the person mentioned on the cheque or his order or the bearer of the instrument.

Parties involved in cheque

1. Drawer
   A drawer is a person who signs on the cheque. He/she is also known as the depositor or cheque marker. He issues the cheque directing the bank to pay a certain sum of money to a certain person or his order to the bearer.
2. Drawee
   A drawee is a party on whom the cheque is drawn. The drawee is the bank. It is the party whom the drawer gives the order to pay the amount of the cheque to the person named on the cheque or his order or to the bearer.
3. Payee
   The payee is the party who presents the cheque for payment. He is the person who receives money from the bank. If the cheque is made payable to self then the drawer himself becomes the payee.

Kinds/Types of the cheque

1. Bearer cheque

   

   
   The bearer cheque is the one, whose money is made payable to the person who presents it into the bank counter. It is thus, written as “Pay to Sunita or bearer”. The serious limitation of this sort of cheque is that any person can get the payment from the bank by just presenting it into the counter.
   
   
2. Order cheque

   

   
   An order cheque is the one, which is made payable to a certain person or order of the drawer. When the order is given to the bank to make payment only to the person specified, it is called an order cheque. Sometimes the ordered person may be busy, so he can endorse the cheque and send to anybody else for encashment.
   
   
3. Cross cheque/ crossed cheque

   

   
   The cheque which is issued with the two parallel lines on its face or without stating any word is called crossed cheque. It signifies that the account of a cheque cannot be withdrawn directly in cash on the counter but should be collected in the bank account of a person.
   There are two types of crossing i.e. general & special.
   
   • General crossing
     The general crossing does not include the name of a particular bank. The effect of general crossing is that any bank can collect the amount of the cheque. The duty of the drawee bank is to pay the amount to any bank, which presents the cheque.
   • Special crossing
     The special crossing contains the name of a particular bank. The effect of the special crossing is that only the bank mentioned in the crossing can collect the amount of the cheque. The duty of the drawee bank is to pay the amount of cheque only to the bank mentioned in the crossing.