10 Essential elements characteristics of cheque

Cheque Specimen copy(Image: Specimen copy of a cheque)

Essential characteristics of a cheque

If one takes a close look at the definition of a cheque, it becomes clear that a cheque has the following 10 essential elements or characteristics.

1. It must be in writing: A cheque must be in writing. An oral order to pay does not constitute a cheque.

2. It should be drawn on banker: It is always drawn on a specified banker. A cheque can be drawn on a bank where the drawer has an account, saving bank, or current.

3. It contains an unconditional order to pay: A cheque cannot be drawn so as to be payable conditionally. The drawer’s order to the drawee bank must be unconditional and should not make the cheque payable dependent on a contingency. A conditional cheque shall be invalid.

4. The check must have an order to pay a certain sum: The cheque should contain an order to pay a certain sum of money only. If a cheque is drawn to do something in addition to, or other than to pay money, it cannot be a cheque. For example, if a cheque contains ‘Pay USD 500 and a TV worth USD 500 to A‘ it is not a cheque.

5. It should be signed by the drawer and should be dated: A cheque does not carry any validity unless signed by the original drawer. It should be dated as well.

6. It is payable on demand: A cheque is always payable on demand.

7. Validity: A cheque is normally valid for six months from the date it bears. Thereafter it is termed as stale cheque. A post-dated or antedated cheque will not be invalid. In both cases, the validity of the cheque is presumed to commence from the date mentioned on it.

8. It may be payable to the drawer himself: Cheques may be payable to the drawer himself/herself. It may be drawn payable to bearer on demand unlike a bill or a pro-note.

9. Banker is liable only to the drawer: The banker on whom the cheque is drawn shall be liable only to the drawer. A holder or bearer has no remedy against the banker if a cheque is dishonored.

10. It does not require acceptance and stamp: Unlike a bill of exchange, a cheque does not require acceptance on part of the drawee. There is, however, a custom among banks to mark cheques as ‘good’ for the purpose of clearance. But this marking is not an acceptance. Similarly, no revenue stamp is required to be affixed on cheques.



Leave a Reply

Recent Posts

Recent Comments

Related pages

definition of retailing in marketingnabard indiaimportance of formal and informal groups in an organisationbudgetary planning and control systemadvantages of a mixed economymiddlemen in distributiondefinition for arrearsp&g branding strategypreci writingadvantages and disadvantages of systematic sampling methodinventory turn ratio formuladisadvantages of debenturesdifferent types of distributionmeaning of lifting of corporate veildifference between wholesaler and retailerimf rolesadvantages of functional departmentalizationundisclosed principal exampledifference between lessor and lesseewhat is a master budget in accountingcost accounting marginal costingmaterial cost variance formulamerits and demerits of zero based budgetingwhat is a finance lease and operating leasetripartite agreement definitiondifference between marketing and publicitysebi managementdurable consumer goodadvantages and disadvantages of variable costingcharacteristics of opinion leaderspetty cash reconciliationfeatures of perfect competition in economicsreceivables turnover ratio formuladays sales outstanding rationpa loanwhat is mbo management by objectivesdefine conveningdefinition arrearsobjectives of consumerismcost oriented pricing methodsexamples of factory overheadscreditor ledgeractivity based costing advantagesimportance of sales forecasting pdfessential of valid contractretained profit disadvantagesdifference between estimation and costingtaylorism advantagesstratified sampling pros and consdisadvantages of clustering in data miningwhy can a promissory note be considered a negotiable instrumentcharacteristics of caste systemthe ultra vires doctrinesales promotion premiumsdischarge of contract by frustrationauditing tick marks legenddisadvantages of market researchadvantages and disadvantages of international monetary systemshare capital advantages and disadvantagesbenefits of informal educationadvantages of cottage industryconcept of caveat emptorwhat is diseconomiesvestibule trainingdishonour definitionrole of reinsuranceadvantage and disadvantage of e businesswhat is the role of sebileverage ratio calculationdefinition of wholesaler and retailertypes of retailing in marketingprocess of securitizationchit fund rules and regulations in indiawhat is operating lease and finance leasestock exchange dealings