A cheque is an instrument in writing containing an unconditional order, addressed to a banker, sign by the person who has deposited money with the banker, requiring him to pay on demand a certain sum of money only to or to the order of the certain person or to the bearer of the instrument.
It is an important means of payment. A cheque is used for paying a large sum of money. It is the most widely used tool for drawing money from the bank. It is used by the buyer or debtor to pay the due amount of goods to his seller or creditor out of his bank deposit. It is a written order issued by a depositor to a particular bank directing it to pay a certain sum of money to a certain person or to the bearer of the cheque.
Characteristics of Cheque –
(1) An Unconditional Order: The drawer or the depositor should not lay down any condition in the cheque.
(2) Drawn upon a Specified Banker: The drawer issues cheque directing to a particular bank had deposited in it to pay the amount of cheque.
(3) Signed By The Maker: It should be signed by the account holder.
(4) An amount in Words and figures: The amount of cheque should be mentioned in words and figures.
(5) Payable on Demand: The amount of cheque must be paid by the bank as soon as it is presented at its counter.