What is a Cheque ?
A check is a written document or paper in which there is an order for the bank to pay a specific amount to the person from the account of the drawer whose name is written on it or to the bearer of the cheque.
Essential features of a cheque.
- The cheque must be in writing, it cannot be oral.
- The cheque must be signed by the maker.
- The amount payable through the cheque must be clearly written on it.
- The cheque must be payable to the specified person.
- The cheque must be payable on demand.
- The cheque is a kind of order by a depositor to the bank.
Parties of a cheque.
- Drawer :- drawer is a person who draws the cheque to the bank which container order for bank to pay a certain sum of money to the bearer or to the person whose name is written on the cheque.
- Drawee:- Drawee is the banker on whom the cheque has been drawn.
- Payee:- A Payee is the person who is entitled to receive the amount written on the cheque.
There are various types of cheque.
- Bearer cheque
- Order cheque
- Crossed cheque
- Account Payee cheque
- Post dated cheque
- Stale cheque
- Ante dated cheque
- Self cheque
- Travellers cheque
- Mutilated check
- Blank cheque
- A bearer cheque is that type of cheque on which the bearer of the cheque is authorised to get the payment against it.
- These type of cheques are endorsable.
- These type of cheques are not to safe because there is no need of identification for the withdrawal of money.
- The person whose name is written on the cheque can either go himself to get the payment or can send a third person to get encashment for the cheque
- The persons whose name is written on the cheque is only liable to get the payment.
- The bank do full investigation to authenticate the bearer’s identity.
- These types of cheques are not endorsable.
- These types of cheques are considered more safer than bearer cheque.
- In this types of cheque the word “or bearer” is cancelled.
Account payee cheque
- In this type of cheque two sloping parallel lines are drawn at the left top of the cheque within the lines the word account payee is written.
- This type of cheques can be presented by any person to the bank.
- Money is not given in hand in this type of cheques.
- The amount is directly transferred to the payee’s account from the drawer’s account.
- These types of cheques are considered safer than any other type of cheques as the payment is directly received by the in the account
- This type of cheques contained two sloping parallel lines at the top of left corner.
- This type of cheques are same as the account payee cheque.
- No third party involvement is required.
- Payment is directly transferred to the persons account whose name is written on the cheque.
- The validity of cheques in India is three months when the date of the cheque crosses this limit it becomes stale cheque.
- If after the validity the person present the cheque in front of the bank to get the payment he or she will not be liable to get any payment.
Post dated cheque.
- Post dated cheques are those cheques which contains the date after the present date.
- If the person present the post dated cheque to the bank immediately after receiving it he or she will not be liable to get any payment until or unless the date arrives.
- These types of cheques are considered legal even after the date written on it but not before the date written on it
Ante dated cheque.
- The cheque that contain the date prior to the current or the present date are called Ante dated cheques.
- Self cheque is the cheque which contain an order for the bank to paid cash to the draw himself.
- You can identify the self cheque easily by spoting the word self in place of payee’s name
- If a person is travelling to the broad instead of carrying so much amount of hard cash he or she can carry Travellers cheque for the exchange of which year she can get money easily in foreign countries.
- There is no expiry date of travelers cheque, one can use it for future travel too.
- Cheque containing wear and tear or torn in condition are called mutilated cheque.
- If the person presents the cheque in front of bank for the payment and Bank found it in torn condition, then Bank can reject the cheque.
- If the cheque contain valid information even after wear and Tear position, then with the concent of drawer the payment can be happened.
- But if the check is torn out completely or did not contain any important data then are not liable to withdrawal money.
- When the cheque only contain drawer signature and all the other fields are left empty then the steps of checks are called blank cheque.
- These are considered the most unsafe cheque among all.