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banker, directing to pay a certain sum of money to the person whose name is
specified in the instrument. In contrast, Bill of Exchange is a document
contains an unconditional order, directing a person, to pay a certain amount to a
specified person.
Cheque is an
1. Comparison Chart
2. Definition
3. Key Differences
4. Similarities
5. Conclusion
Comparison Chart
BASIS FOR
CHEQUE
COMPARISON
Meaning A document used to make easy payments on demand and can be transf
hand delivery is known as cheque.
Crossing Yes
Drawee Bank
BASIS FOR
CHEQUE
COMPARISON
Cheque
A cheque is a type of bill of exchange, used for the purpose of making payment to
any person. It is an unconditional order, addressing the drawee to make payment
on behalf the drawer, a certain sum of money to the payee. A cheque is always
payable on demand, i.e. the amount is paid to the bearer of the instrument at the
time of presentment of the cheque. It is always in writing and signed by the
drawer of the instrument.
It should be noted that the issuer must have an account with the bank. There is a
specified time limit of 3 months, during which the cheque must be presented for
payment. If a person presents the cheque after the expiry of 3 months, then the
cheque will be dishonored. The various types of cheques are:
There are three parties involved in the bill of exchange, they are:
Drawer: The maker of the bill of exchange.
Drawee: A person on whom the bill is drawn, i.e., the person who gives
acceptance to make payment to the payee.
There are three days of grace allowed to the drawee, to make payment to the
payee, when it becomes due. You might wonder about the days of grace, lets
understand it with an example: A bill is drawn on 5-10-2014 in the name of X, to
make payment to Y after 3 months. The bill will become due on 5-01-2015 while
the date of maturity is 8-01-2015 because of 3 days of grace are added to it. The
following are the types of bill of exchange:
Inland Bill
Foreign Bill
Time Bill
Demand Bill
Trade Bill
Accommodation Bill
3. The drawer and payee are always different in the case of a cheque. In
general, drawer and payee are the same persons in the case of a bill of exchange.
Always in writing.
Conclusion
Cheque and Bill of Exchange both are used to make payments easily. However,
the cheque itself is a type of bill of exchange, used to discharge the liabilities and
so it consists of all the features of a bill of exchange. Not only in business, but
individuals, government agencies, and other institutions also use the cheque to
make payments but the bill of exchange is mostly used in business.