The term cheque may be defined as a bill of exchange which is drawer upon a banker and always payable on demand.
“A Cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise on demand”.
The analysis of this section shows that a cheque is a bill of exchange with the following two additional requirements:
- A cheque is always drawn on a specified bank and
- A cheque is always payable on demand.
A cheque being a bill of exchange must have all its essential requirement. Thus a cheque must contain an unconditional order or a specified banker to sum of money. Therefore, by a cheque a banker is directed to pay a certain amount of money on demand.
PARTIES TO A CHEQUE:
Following are three main parties in a cheque:-
It is a person who makes the cheque. In other words he is the maker of a cheque.
It is a banker who is directed to pay the amount of the cheque i.e. on whom the cheque is drawn. It may be noted that in case of a cheque the drawee is always a banker.
It is a person to whom the amount of the cheque is payable.
However in some cases the drawer and the payee may be the same person e.g. where a person draws a cheque payable to self.
ESSENTIALS OF A VALID CHEQUE:
The legal definition of the term “Cheque”, discussed in the last reveals that it is a special kind of bill of exchange drawn upon a banker. These essential elements of cheque are as under:-
IT MUST HAVE ALL THE ESSENTIALS OF A BILL OF EXCHANGE:
The first requirement of a valid cheque is that it must have all the essential elements of a bill of exchange. The reason for the same is that the cheque is primarily a bill of exchange drawn upon a banker. The essentials of bill of exchange may be.
Summed up as under:
- It must be in writing.
- It must certain and unconditional order to pay.
- It must contain an order to pay in terms of money.
- It must contain an order to pay a definite amount of money.
- It must be signed by the drawer.
- It must contain definite parties.
2. IT MUST PAYABLE ON DEMAND:
A cheque must be payable on demand. As a matter of fact a cheque is always payable on demand.
IT MUST BE DRAWN ON A SPECIFIED BANKER:
A cheque must be drawn on a specified banker. A cheque drawn on any person other than a banker is not valid.
MARKING OF A CHEQUE:
The term marking of a cheque may be defined as the writing on a cheque by the drawee banker that it would be hounoured when duly presented for payment. A cheque may be marked with words ‘approved’ or ‘good’.