Essentials of a Cheque

by • 11/06/2011 • 2nd year BankingComments (0)709

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.

  1. Cheques must be in the form of an order, not a request.
  2. The order must be unconditional. If any condition is attached with the order the cheque will lose its legality.
  3. The cheque must be in writing. An oral order on the bank for drawing cash will not be accepted as a cheque.
  4. The amount demanded must be for certain amount in money, not in kind.
  5. The payment must be made to a certain person, bearer, or self.
  6. The cheque must be payable on demand.
  7. It must be drawn on a banker.
  8. It must be signed by the accountholder.
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