Define Cheque and discuss the essentials and kids of cheque

CHEQUE :-
A written order of a depositor upon a bank to pay the designated party or the bearer a specified sum of money on demand. The person who draws the cheque is called drawer and the person whom the payment is made called payee. The bank will be called drawee.


ESSENTIALS OF CHEQUE

1. In Writing :-
The cheque must be in writing. It can not be oral.


2. Unconditional :-
The order to pay must be unconditional.


3. Signature of the Drawer :-
It must be signed by the maker.


4. Certain Sum of Money :-
The amount in the cheque must be certain.


5. Payees Must be Certain :-
It must be payable to specified person.


6. Only Money :-
The payment should be of money only.


7. Payable On Demand :-
It must be payable on demand.


8. Upon a Bank :-
It is an order of a depositor on a bank.



DIFFERENT KINDS OF CHEQUE

1. Customer's Sight Draft :-
The cheque which is an order upon a commercial bank by its client who has already deposited money with it is also called customers sight draft.


2. Certified Cheque :-
These cheques are used where the drawer of the cheque is not trust worthy. It is that cheque on which the payment is guarantee to the payee by the drawee bank. When the cheque is presented to officer of the bank he writes certified or accepted on the face of the cheque. The cheque is honored whenever it is presented to the bank.


3. Cashier's Cheque or Treasure's Cheque :-
It is drawn upon a bank by its own officer for meeting the expenses of the banks.


4. Bank Money Orders or Registered Cheques :-
A person who wants to transfer a certain sum of money may use bank money order. The person has to pay the amount of the money order plus a bank fee and receives the registered cheque from the bank. He then signs the cheque, fill in the name of the person and then forward the cheque to the payee.


5. Traveler's Cheque :-
These cheques enables the tourists to meet the expenses of their trip. These are not only acceptable by the issuing bank but also by the merchants and hotels inside and outside the country.

The procedure is simply to pay the bank amount of the order and the bank commission. The bank will issue cheques on which the value is already printed. The guarantor has to sign all the cheques issued in the presence of issuing banker.


6. Drafts :-
A draft is a cheque drawn by one bank upon another bank ordering to pay the payee. Bank drafts are commonly used inside and outside the country for the transfer of money. It has also helped in financing the foreign trade.


7. Crossed Cheque :-
A crossed cheque is paid only through the bank. The paying bank is to make payment strictly according the instructions conveying by a crossing. Generally parallel lines are drawn on the face of the cheque.