Definition: Cheques are bills of exchange drawn on a banker payable on demand. They are instruments used to withdraw money deposited in the bank.
Essentials of a Cheque: Cheques must fulfill certain conditions without which their status as cheques will not be legally accepted and they would be liable to be dishonored. The following are their essentials.
- Cheques must be in the form of an order, not a request.
- The order must be unconditional. If any condition is attached with the order the cheque will lose its legality.
- The cheque must be in writing. An oral order on the bank for drawing cash will not be accepted as a cheque.
- The amount demanded must be for certain amount in money, not in kind.
- The payment must be made to a certain person, bearer, or self.
- The cheque must be payable on demand.
- It must be drawn on a banker.
- It must be signed by the accountholder.