Cheque are unconditional order in writing drawn on a bank by its customer to pay on demand the amount specified on the cheque to the person named therein i,e., or to his order , or to the bearer of the cheque. A bank is likely to deposit the cheque or make payment, on the condition that the cheque is regular and the drawer has sufficient balance in his account to meet the amount specified in the cheque.
There are three parties of a cheque (i) drawer or account holder (ii) drawee or the bank, and (iii) payee to whom money is to be paid on demand. The drawer and payee can be the same person.
A cheque is considered convenient and safe mode of making payment. When the payment is made by a cross cheque, the record of payment and receipt is not essential. Various types of Cheques found in India are:
(a) Bearer cheque: This type of cheque is payable to any person who presents it on the cash counter. This type of cheque can be transferred by mere delivery.
(b) Order cheque: The amount for such cheque is only payable to the person who name is specified on the cheque or to is order. This type of cheque can be transferred only by endorsement and delivery. To endorse a cheque, the payee has to write on the back of the cheque the amount may be paid to ………………………..(name of the person to whom payments to be made). He has also to verify the signature of such a person.
(c) Account payee cheque: The payment for such cheque is only credited in the account of the person named therein. Such kind of cheque can’t be encashed at the counter.
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