A Cheque is a negotiable document that orders a bank to pay a certain sum of the amount of money from our account to another account whose name is issued in that particular cheque. It is used to make safe, secure, and convenient payments without a third-party person between transactions.

Canadian Cheque 2006

Definition of a cheque as per The National Provincial Bank circa 1968 was “an unconditional order in writing drawn on a Banker, signed by the drawer, instructing the Banker to pay on demand a sum certain in money to or to the order of a specified person or to Bearer and which does not order any act to be done in addition to the payment of money”.

they were used since the 9th century as a mode of payments but gained peak levels in the 20th century. later in the 21st-century, it’s usage was slightly decreased due to electronic payments which became most common in the present days.

There are many other modes of financial payments that are used by individuals, corporates, and firms. Out of these modes, the cheque is most used because it is the safe and most convenient way for successful payments.

Parties of Cheque:

Commonly, there are three types of parties to this mode of financial payment system:

  1. Drawer: The person who signs and orders the particular bank to pay the sum of the amount of money.
  2. Drawee: who is ordered to pay a certain amount of money written on.
  3. Payee: the beneficiary to whom the amount is to be paid.

Note: Sometimes drawers and payee can be the same which is called self-cheque.

To Be Checked Before issuing Cheque:

There are certain things to know before making this mode of financial transactions. here are some important points listed below.

  • It is an unconditional order.
  • It can be only drawn on a particular Bank that is used by a drawer.
  • Signature on exchequer is a mandate and only by the maker.
  • The amount is always a certain sum of money in one’s account.
  • It is always payable on demand.

Note: We have listed only a few.

Types Of Cheque:

  1. Open Cheque: it’s one on that money is collectable at the counter of the bank, or it transferred to the checking account of the person whose name is written on the cheque. it’s negotiable, i.e. it’s transferable in nature.
  2. Bearer Cheque: it refers to the cheque which may be encashed by the person whose name is written on the cheque or anyone who presents the cheque before the bank for payment. it’s negotiable in nature, which may be transferred by merely delivering it and then endorsement isn’t required. No identification of the presenter or holder is needed.
  3. Order Cheque: because the name suggests, it’s the cheque that becomes collectable to the person or organization whose name is such that on the cheque or to his order. To convert a bearer cheque into AN order cheque, the word ‘or bearer’ is stricken aloof. Endorsement of the cheque to the third party is finished by mere language on the cheque.
  4. Crossed Cheque: you may have ascertained, 2transversal parallel lines at the highest left corner of some cheques, which can or might not have the words – & Co., A/c receiver or Non-Negotiable. Such cheques square measure thought to be crossed cheques. the quantity on such cheques is attributable to the account of the receiver.
  5. Self Cheque: once someone needs to withdraw cash from his own account, by writing ‘self’ at the name of the receiver. don’t cross the cheque or cancel the words ‘or bearer’ from the cheque. These cheques shouldn’t be crossed, likewise because the words ‘or bearer’ shouldn’t be stricken aloof from the cheque, in order that someone as your representative will receive the quantity on your behalf.
  6. Blank Cheque: which is barely signed, however, the name of the receiver and date isn’t indicated, is named a check. Such cheques are created account receiver, and also the most limit of withdrawal is mentioned.
  7. Stale Cheque: A cheque bears a date and is valid up to 3 months of the declared date. If it is given before the bank, once the end of the cheap amount, i.e. 3 months once the date, then it’s known as a stale.
  8. Post-Dated Cheque: once a cheque is drawn containing a future date, it’s known as a post-dated. In such cases, the cash won’t be collectable by the bank before that date.
  9. Ante-dated Cheque: A cheque containing a previous date, is named AN ante-dated cheque. Bank honours cheques till 3 months to the date mentioned.
  10. Banker’s Cheque: Otherwise known as a payment order, it’s a non-negotiable instrument, that is issued by the bank on behalf of the client, that is collectable within the same town.
  11. Cancelled Cheque: thanks to any quite mistakes whereas writing the cheque, it’s off, and then it’s known as an off cheque.
  12. Mutilated Cheque: A cheque that is torn, damaged, crushed or washed, is named a mutilated cheque. Such cheques square measure worthy only if sure details square measure visible, once confirming with the drawer.
  13. Traveler’s Cheque: A cheque issued by a bank for a fee, containing a set quantity. These cheques square measure enchased or accustomed create payment during a foreign country, once endorsement by the signature of the holder.
  14. Gift Cheque: the square measure used for the aim of gifts and prizes, typically terribly giant in size, a square measure. Banks charge a fee for supply such cheques.

Safety Measures for Writing a Cheque:

  • You should scrap the cancelled cheque.
  • make sure that you should hand over the cheque without writing date and amount in letters.
  • your sign should be clear as in bank records because banks check for your sign in their database to verify the with an issued cheque.
  • never stable or fold the cheque because the bank doesn’t consider those.

Thanks For Reading.


This is Mohanraj Reddy✌️❤️ Creator at Business Mavericks & a Big Dreamer, Wanderlust, Music, & a Trader.

Write A Comment