Distinction between a Cheque and a Bill of Exchange

You have studied the meaning of a bill of exchange and a cheque separately. Now you should know the distinction between these two instruments. The differences are as follows:




1) The cheque is always drawn on a bank while a bill can be drawn upon an individual as well as a bank.

2) The cheque is always payable on demand immediately without any period of grace, while a bill, unless payable on demand, is entitled to three days of grace. Since a cheque is. payable instantly on demand, the law casts a duty on the payee to present the cheque for payment within a reasonable time. Three months from the date of issue is the practice now.

3) A cheque does not require an acceptance. It also does not require a stamp as is the case with a bill.

4) A cheque can be drawn payable to bearer on demand, whereas a bill cannot.

5) A cheque can be revoked by countermanding of payment. A bill of exchange cannot be countermanded.

6) A banker is entitled to statutory protection in certain cases with regard to payment of cheques. No such protection is available to the drawee or acceptor of a bill of exchange.

7) The provisions of the Act as to ‘crossing’ are exclusively applicable to cheques. (Other instruments analogous to a cheque are banker’s drafts and dividend warrants and they may also be crossed.)

8) All cheque forms are issued by banks themselves and no other form is honoured by them whereas individuals may still have their own forms of bills of exchange and promissory notes.

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