Types of Cheques

Types of Cheques :

Bearer Cheque: When the words 'bearer' appearing on the cheque are not cancelled. The bearer cheque is payable to the person specified therein or to any other else who presents it to the bank for payment. However, such cheques are risky. This is because if such cheques are lost, the finder of the cheque can collect the payment from the bank.

Order Cheque: When the word 'bearer', appearing on the face of cheque, is cancelled and when, in its place, the word 'order' is written on the face of the cheque, it is called an order cheque. Such a cheque is payable to the person specified therein as the payee, or to anyone else to whom it is endorsed.

Uncrossed/Open Cheque: 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. An open cheque may be a bearer cheque or an order one. Crossed Cheque: Crossing of a cheque means drawing parallel two 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.

Types of Crossing:

(a) General Crossing : In a general crossing, simply two parallel transerve lines, with or without the words the words not negotiable in between, may be drawn. Such a cheque is crossed generally. The effect of general crossing is that the payment of the cheque will not be made at the counter; it can be collected only through a banker.

(b) Special Crossing: In a special crossing, the name of a banker with or without the words not negotiable is written on the cheque. Such a cheque is crossed specially to that banker .The effect to special crossing is that the paying banker will transfer the amount of the cheque only through the bank named in the cheque.It should be noted that two transverse parallel lines are necessary for a general crossing, whereas for a special crossing, no such lines are necessary.

(c) Restrictive Crossing: This type of crossing has been recognised by usage and custom the trade. In a restrictive crossing, the words 'Account Payee' or 'Account Payee Only are added to the general or special crossing The effect of restrictive crossing is that the payment of the cheque will be made by the bank to the collecting banker only for the account payee named. If the collecting banker collects the amount for any other person, he will be liable for wrongful conversion of funds.

(d) Not Negotiable Crossing: A cheque crossed generally or specially, bearing in either the words 'not negotiable' shall not be able to give a better title to the holder than that of the transferor. The effect of a not negotiable crossing is that the cheque can be transferred but the transferred will not acquire a better title to the cheque. Thus, a cheque is deprived of its essential features of negotiability. The object of "not negotiable" crossing is to protect the drawer against loss or theft in the course of transit.

5. Ante-Dated Cheque: 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.

6. Post-Dated 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

7. Stale 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.

Sample Questions

(More Questions for each concept available in Login)

Question : 1

Account Payee Cheques can be paid _________________
A. At cash counter of Bank		B. At ATM
C. By deposit in Bank account		D. None of above
Right Option : C
View Explanation