Define a Cheque. What are the Essentials of a Valid Cheque

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CHEQUE:

The term cheque may be defined as a bill of exchange which is drawer upon a banker and always payable on demand.

S.6: DEFINITION:

                “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:

  1. A cheque is always drawn on a specified bank and
  2. 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:-

DRAWER:

It is a person who makes the cheque. In other words he is the maker of a cheque.

DRAWEE:

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.

PAYEE:

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:-

  1. 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:

  1. It must be in writing.
  2. It must certain and unconditional order to pay.
  3. It must contain an order to pay in terms of money.
  4. It must contain an order to pay a definite amount of money.
  5. It must be signed by the drawer.
  6. 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.

  1. 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.

  1. 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’.

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