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November 05, 2013

Characteristics / Features of a Cheque


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Friends, in our last post we have discussed about the introduction of Cheque. In this post we shall discuss some features / characteristics of a Cheque.
  1. Instrument in writing : A cheque must be necessarily in writing. Oral orders to the bank to pay some money do not constitute a cheque. 
  2. Contains an Unconditional Order : A cheque is an order to a particular bank to pay a particular sum of money. It should not contain any words of request like "please" or "kindly". It is also not necessary that the words 'order' must form a part of the writing because the word 'pay' itself denotes an order. The order must be unconditional. Any conditional order does not constitute a cheque.
  3. Drawn on a Specified Banker : A cheque is always drawn on a particular banker only. Generally the full name and address of the bank is printed on the cheque. The cheque is encashable at the bank on which it is drawn. Even a cheque drawn on a particular branch cannot be encashed at another branch of the same bank unless there is an agreement between the parties.
  4. Payee to be certain : To be a valid cheque, it must be payable to a certain specified person or to his agent or the bearer there off. Sir John Paget rightly pointed out in this regard that, "A normal cheque is one in which there is a drawer, a drawee banker and a payee or no "payee but bearer."
  5. Order to Pay a Certain sum of Money " A cheque is usually drawn for a definite sum of money. Indefiniteness has no place in monetary transactions. That is the modern bankers insist on writing the amount both in fugures and words.
  6. Payable on Demand only : A cheque is always payable only on demand. It is not necessary to use the word 'on demand' as in the case of demand bill. As per Sec. 19 of the Negotiable Instruments Act, unless a time factor is specified by the drawer, the cheque is alwayas payable on demand.
  7. Signed by the Drawer : To be valid, a cheque should be signed by a customer who draws it. The drawer normally puts his signature at the bottom right hand corner of the cheque. When this signature differs from the specimen signature, the cheque will be dishonored. 

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