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November 05, 2013

Difference between a Bill of Exchange and Cheques


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Friends, so far we have discussed about Bill of Exchanges and Cheques. As we have already mentioned, even though a cheque is similar to Bill of Exchange still they have some differences. Have a look,
  1. Drawee :
    1. Cheque : The drawee of a cheque is always a Bank.
    2. Bills of Exchange : Any one can be drawee in the case of Bill of Exchange.
  2. Form : 
    • Cheque : A cheque is always drawn on a printed form.
    • Bills of Exchange :  A bill need not be drawn on a printed form.
  3. Acceptance : 
    • Cheque : The drawee (banker) need not accept a cheque.
    • Bills of Exchange : Acceptance by the drawee is essential.
  4.  Supposition :
    • Cheque : A cheque is always supposed to be drawn against the funds in the hands of the banker.
    • Bills of Exchange : There is no such supposition.
  5. Time of Payment :
    • Cheque : A cheque is an instrument for immediate payment.
    • Bills of Exchange : It is drawn for a specified period and so it is intended for circulation. Therefore it is entitled to days of grace.
  6. Period of Liability :
    • Cheque : The liability of the drawer continues for 6 months.
    • Bills of Exchange :Unreasonable delay in the presentation will discharge the bill.
  7.  Stamp Duty :
    • Cheque : A cheque is free from stamp duty.
    • Bills of Exchange : A bill is subject to stamp duty.
  8. Sets :
    • Cheque : It is not drawn in sets.
    • Bills of Exchange :Foreign bills are always drawn in sets.
  9.  Crossing :
    • Cheque : It may be crossed to ensure safety.
    • Bills of Exchange : It cannot be crossed.
  10. Countermanding :
    • Cheque : A cheque may countermanded.
    • Bills of Exchange : Countermanding of a bill is not possible.
  11. Protest :
    • Cheque : It is not protested or noted on dishonor.
    • Bills of Exchange : It is usually protested and noted for dishonor.
  12. Notice of Dishonor :
    • Cheque : In case of dishonor, notice of dishonor to the drawer is not essential.
    • Bills of Exchange : Notice of dishonor must be sent to hold the party liable.
  13. Statutory Protection :
    • Cheque : Statutory Protection as given under Sec. 85 and Sec. 131 of the Negotiable Instruments Act applies only to cheques.
    • Bills of Exchange :Statutory protection is not available in the case of bills.

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