Cheques have the following kinds:
- 1. Primary Kinds
- Bearer cheque
- Order cheque
- Cross cheque
- 2. Secondary Kinds
- Cashier’s cheque or pay order
- Confirmed cheque
- Open cheque
- Bank draft
1. Bearer Cheque: This is the cheque which is possessed or owned by the bearer. Any person who presents it at the counter of the bank will receive cash mentioned in it.
2. Order Cheque: When the cheque bears the name of the receiver of cash, it is called order cheque. In such a case the word ‘bearer’ is cancelled. It is payable to a person named therein or his order. Order cheque can be endorsed or transferred to a third person by the order of the original payee.
3. Cross Cheque: It is a cheque that cannot be cashed at the counter of the bank. It must be deposited in the bank account of drawee. It is known as a cross cheque because two parallel lines are drawn across it. Cross cheques are safer than bearer and order cheques, since they cannot be cashed at the counter and must be deposited in the bank account. Hence the possibility of forgery is minimum.
1. Cashier’s Cheque or Pay Order: It is a cheque in which a bank orders the other bank to pay a certain sum of money to a third person. The pay order can be crossed and is payable within a city. It is issued to a person requesting for it only when he has deposited the same amount plus bank charges with the bank.
2. Confirmed Cheque: When a cheque is confirmed by the bank it is known as confirmed cheque. The bank deducts the amount such a cheque at the time of confirmation and therefore cannot bounce. They are extremely reliable. They may be order or crossed cheques.
3. Open Cheque: When the crossing of a crossed cheque is cancelled it becomes an open cheque and hence can be cashed at the counter of the bank.
4. Bank Draft: It is an order or a cross cheque issued by one bank in one country or city to the bank in other country or city in favour of a third party.
If the draft is issued in favour of person in a foreign country it is known as a foreign bank draft; and if its issued for a person in the other city within a country, it is called inland draft. It may be an order or a cross cheque.
SPECIMEN OF CHEQUE
KINDS OF CROSS CHEQUES
If two parallel lines are drawn across the cheque, it becomes no longer payable on demand and cannot be cashed across the counter of the bank.
The two parallel transverse lines drawn across the cheque may or may not carry words “not negotiable”, “& Co.” “A/c Payee only”. Cheque carrying any type of crossing must be deposit into the bank account of the designated person.
Crossing of the cheque have the following types.
- General crossing
- Special crossing
1. General Crossing: When two parallel transverse lines are drawn across the cheque it becomes a cross cheque with general crossing. General Crossing may be blank or may carry words between it as:
A/c payee only
General crossing may be used for three difference purposes:
a.“Not negotiable” crossing: A cheque crossed “not negotiable” loses its negotiability and ceases to be a negotiable instrument. The crossing, however, does not prevent the holder from transferring the cheque to another party. If this cheque is stolen, the true owner will be entitled to recover the loss from the banker who paid out on it.
b. “Account Payee” Crossing: If a cheque is crossed “account Payee”, it ceases to be a negotiable instrument, and the bank is bound to credit the person designated in the cheque.
c. Plain Crossing: When two parallel transverse lines are put across the cheuq with or without “& Co” between them, these parallel lines are called plain crossing. Cheques bearing such a crossing stays negotiable and can be transferred to other parties.
2. Special Crossing: If two parallel transverse lines are drawn across the cheque with the name of bank, the ines are called special crossing. The naming of the bank between the parallel lines offers additional security in the transfer of monies, and the cheque must be presented to the bank designated therein. Now the use of special crossing is no longer in vogue.
- This crossed cheque can only be deposited in the Garden Branch of Habib Bank.
- This cheque can be deposited in any of UBL.