Differences between a cheques and a bill of exchange

by • 06/01/2013 • GeneralComments (0)459

Q.9 Discuss the differences between a cheques and a bill of exchange.

CHEQUE BILL OF EXCHANGE
1. Definition

It is an order, written by the drawer, to a banker to pay on demand a specified sum on the person named on it.

It is an order written by the drawer to pay to the drawee a specified sum of money at a certain date.
2. Statement

It is an order of payment to the bank

It is an order of payment to the debtor or drawee.
3. Payment

Its payment is made on demand.

It’s (except sight bills) payment is always made according to its date.
4. Parties

Its has three parties — viz., drawer, drawee, and payee.

Sometimes, instead of drawee another person accepts it; therefore, it has four parties viz., drawer, acceptor, drawee and pyee.
5. Drawer

Its drawer is a customer or accountholder of a bank.

Its drawer can be ordinary debtee or seller.

 

6. Drawee

Its drawee is the bank (branch).

Its drawee is the debtor or buyer.
7. Holder

Its holder can be the accountholder, or endorsee.

Its holder can be debtor, or drawer, or endorsee.
8. Acceptance

It needs no acceptance for drawing from its drawee.

It (except a sight bill) does need an acceptance for drawing from its drawee.
9. Material

It is a prescriptive printed-paper provided by the banker.

It can be made on an ordinary plain paper.
10.Crossing

It can be crossed for its safety.

It cannot be crossed.
11.Currency

It is inland only; therefore, its amount is written in domestic currency.

It (if is inland) amount is written in domestic currency, but in case of foreign bill in the relating foreign currency.
12. Endorsement

It (except bearer cheqe) can be endorsed.

It (all kinds) can be endorsed.

 

13. Use:

It use is very easy and frequent.

It attaches complex obligations with it; therefore, it is not used frequently.
14. Copies:

It needs no further copies.

It (if is inland) needs no further copies but in case of foreign bill three copies are made.
15. Due Date

It can be cashed from its issuing date and onto the next six months, but within banking hours.

Its sue date is written on it.

 

16. Days of Grace

It has no days of grace.

It (except sight bill) has three days of grace.
17. Discounting

It cannot be discounted, and cannot be cashed before its issuing date.

It can be discounted before its maturity date.

 

18. Refusal of Payment

Its payment can be refused by the bank, say, when its value exceeds the fixed limits.

Its payment is compulsory.
19. Kinds

It has three main kinds (only inland) viz., bearer cheque, order cheque, and crossed cheque.

It has two main kinds – viz., inland bill, and foreign bill.
20 Revenue Stamps

It needs no imprinting of revenue stamp; rather government imposes excise duty on it.

It does need imprinting of revenue stamps according to its value, and for a proof of it legal status
21. Excise Duty

It is issued with paying an excise duty to the government.

It does not need any excise duty to be paid to the government.
22. Notice of Dishonour

It needs no notice of dishonour.

It does need a notice of dishonour to inform the related parties.
23. Noting or Protesting

It needs no noting or protesting when

Dishonoured.

It (if Dishonoured) does need noting. Further, in case of a foreign bill protesting follows noting.

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