Also, when the word ‘or bearer’ is cancelled out, the cheque becomes an order one. As against, in order cheques, the words ‘or order’ is there after the name of the payee. In bearer cheques, the words ‘or bearer’ is present after the name of the payee.But, an order cheque is one which is payable to the payee or any other person to whom the payee authorizes. A bearer cheque is one that can be encashed by any person who presents the same at the counter of the bank for payment.The points given hereunder elaborate on the difference between bearer cheque and order cheque: Key Differences Between Bearer Cheque and Order Cheque Further, no additional authorization from the issuer is necessary in this case. This means that if you take the cheque to the bank, the bank issues payment to you against the cheque. The transfer of such cheques takes place through simple delivery.Nevertheless, the bank doesn’t ask for identification proof of the bearer, but when the amount is substantial, the bank may ask for identification proof. Further, the paying cashier does not need to take many precautions to decide the faithfulness of the payee’s ownership.This is to confirm the receipt of the funds from the bank. But for safety purposes, the bank asks the bearer to sign at the back of the cheque in the presence of the cashier. Though there is no rule of taking the signature of the holder of the cheque at the time of its encashment.It is easily transferable through mere delivery, without any endorsement by the transferor of the cheque. In short, these cheques are payable over the counter to the bearer or presenter of the cheque by the bank on which the cheque is drawn. Meaning that no endorsement can make the cheque payable except to its holder. Moreover, one must note that a bearer cheque is always a bearer. But there is an exception when there is the conversion of cheque from bearer to order. And in this way, the bank is discharged from liability by making payment in due course to the bearer. the person who carries the cheque and presents it to the bank for payment. The drawer cannot convert an order cheque into a bearer one.Ī bearer cheque is payable to the bearer, i.e. The drawer can convert a bearer cheque into an order one. No responsibility of the banker or drawee.īanker or drawee will be held responsible. The signature of the payee of the cheque acts as an endorsement only.īanker's Responsibility for payment of funds to the wrong person The recipient's signature acts as a receipt itself. Only payee or as per his order the cheque can be encashed. Order cheque is a cheque payable when the only person named on the cheque presents it at the counter of the bank.Īt the end of the name of the payee, you will find the word 'bearer' on it.Īt the end of the name of the payee, you will find the word 'order' on it.Īny person can encash the cheque by any person holding or carrying the cheque. holder who carries and presents the cheque at the bank counter gets the payment. Payee: It is the party to whom the money specified in the cheque is payable.īearer Cheque is the one payable to the bearer, i.e.Drawee: It represents the bank that will make the payment.Drawer: He/She is the person who has the bank account and issues (draws) the cheque for making payment.Also, both individuals and corporate entities can use cheques as a mode of payment. Unless there is some specific reason, banks generally hand over the funds when the payee produces the cheque at the counter.īanks provide a chequebook facility in both savings accounts and current accounts. The validity of the cheque is for 3 months. For this, all you need to do is – fill the required fields in the cheque leaf, such as: What is a Cheque?Ī cheque is a financial instrument which contains an order in writing that directs the bank to pay the sum specified in it from the concerned bank account. Whereas in order cheques, the word ‘ or bearer‘ is struck out or the word ‘ or order‘ is there after the end of the payee’s name. The bearer cheque has the word ‘ or bearer‘ written on it. The best way to identify whether a cheque is an order or bearer is to look for the words in the cheque leaf itself.
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