Q.7 Define cheque and its kinds.
According to Section, 6 of the negotiable instruments act
A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand”.
A cheque is an unconditional order in writing, signed by the drawer, drawn upon a specified banker directing him to pay on demand a certain sum of money, only to or to the order of a certain person or to the bearer of the instrument.
PARTIES OF CHEQUE
There are three parties to a cheque:
The person who draws the cheque is called drawer.
The Bank on which the cheque is drawn is called drawee.
The person to whom the payment of a cheque is made payable is called payee.
KINDS OF CHEQUES
These are different kinds of cheques.
CUSTOMER 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 customer sigh draft.
These cheques are used where the drawer of the cheques is not trustworthy. It is that chques c’n which the payment is guaranteed to the payee by the drawee banks. When the cheque is presented an officer of the bank writes certified or accepted on the face of the cheques The cheques are honored whenever it is presented to the bank.
CASHIER’S CHEQUE OR TREASURE’S CHEQUE
Its own offices for meeting the expenses of the banks draw it upon a hank.
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 cheques from the bank; he has then to sign the cheques, filled in the name of the person and then forwards the cheques to the payee.
These cheques enable the Tourist to meet the expenses of his 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 cumuli to pay the bank the amount of the order and the bank commission. The bank will issue cheques on which the value is already printed. The guaranteed has to sign all the cheques issued in the presence of issuing banker.
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.
A crossed cheque is paid only through the bank. The paying bank to make payment strictly according the instructions conveyed by a customer generally parallel lines are drawn on the face of the cheques.
A bond is an interest-bearing instrument, which contains a promise to pay a fixed sum of money at a definite future time. In fact it is a long-term loan by the bondholders to the issuer.
These are the issued by the Government to borrow money. They are a form of short-term credit usually issued for a term of 90 days.
WHO CAN CROSS A CHEQUE
The following parties can cross a cheque:
The drawer can make general or special crossing on the cheque.
A cheque holder can cross the cheque in the following ways:
(a) If the drawer does not cross the cheque then the holder of the cheque can make general or special crossing.
(b) If the drawer makes a general crossing on the cheque then the holder can convert it into the special crossing.
(c) The holder may write the words like- “AND COMPANY”, “NON NEGOTIABLE” or “ACCOUNT PAYEE ONLY” etc. in the two parallel line, no matter he himself draws the line or he got the cheque already with these lines.
The bank has also a right to cross the cheque of his customer in the following ways:
(a) If a cheque is presented in the bank without any crossing then the bank can make special crossing by writing its own name.
(b) If the cheque is specially crossed by the customer to the bank then the bank terminates the first crossing and makes again a special crossing to another bank or to its own agent to receive the amount.
TERMINATON OF CROSSING
Only the drawer can terminate the crossing of the crossed cheque. This termination is making when the drawer writes the statement “CROSSING TERMINATED” and signs the material change. The termination of crossing may be needed when the payee has no account with the bank and he does not want to open an account with the bank. The payee simply returns the cheque to the drawer for the termination the crossing. Although english teachers love creativity, teachers of other subjects especially www.paper-writer.org
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