A cheque is an agreement between two individuals or organizations to make a payment. In simple words Cheque is an order to a bank to pay a stated sum from the drawer’s account, written on a specially printed form. Cheque is used to make safe and convenient payment. It is less risky and the danger of loss is minimized.
Types of Cheques
Bearer Cheque refer to a cheque that is payable to whoever presents the cheque, rather than to a designated payee.
When a cheque is not crossed, it is known as an “Open Cheque” or an “Uncrossed Cheque”. The payment of such a cheque can be obtained at the counter of the bank.
Crossing of cheque means drawing two parallel lines on the face of the cheque. A crossed cheque cannot be encashed at the cash counter of a bank but it can only be credited to the payee’s account.
If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as “anti-dated cheque”. Such a cheque is valid upto three months from the date of the cheque.
If a cheque bears a date which is yet to come (future date) then it is known as post-dated cheque. A post dated cheque cannot be honoured earlier than the date on the cheque.
If a cheque is presented for payment after three months from the date of the cheque it is called stale cheque. A stale cheque is not honoured by the bank.