Cheque: Characteristics of Cheque

Characteristics of a Cheque:

A cheque is a written order to a bank to pay a specific sum of money to another person through the drawer's account.

Below are the characteristics or features of a cheque:

1. A cheque is an unconditional order

A cheque may be defined as an order to pay a person (called the payee) from another's account (that is; the drawer). A cheque is not made to be paid to a person based on conditions.

Please read on the Introduction to Cheque here.

For instance, a cheque cannot read: "Pay her if she comes along with the rent receipt".

In short, a cheque made to be conditional is not a cheque in the first place. Such is considered as invalid.

2. A transaction involving a cheque will always have 3 parties

The three parties involved in the transaction involving a cheque are the drawer, drawee and payee.

• A drawer is a person who writes or draws or signs a cheque to his bank account ordering his bank to pay the money specified on the cheque to another person (called the payee).

  The drawer is also referred to as the maker.




• The drawee is the entity (typically a bank) whom the drawer gives an order to pay the payee.

  The drawee is always the party upon whom the cheque is drawn.




• A payee is an individual or an entity (organization) to whom the cheque is made payable.

  The payee is responsible for cashing out the cheque; that is; gets paid through the cheque.

Please read on Credit Card and Debit Card as Methods of Payment here.

3. A cheque must always be written

A drawer must write a cheque to the payee. There isn't anything like an oral cheque.

A cheque is usually written through an ink pen, but it can also be typed or printed.

4. Payment through Cheques is made through Cash or Transfers

Payments through cheques will be made to the payee by the drawer either in cash or by transfer.

Note: The transfer of money through cheques can be made into payee's bank account or a third party's bank account.

Payments via transfer is usually accomplished via a crossed cheque.

If a third party is involved in the transfer of payments, such are referred to as the transferor.

Please read on Bank Wire and Wire Transfer here.

5. The cheque is drawn on a specified banker only

A cheque is usually drawn on a bank (termed drawee) where the drawer has a account. This implies that the drawer must be a customer of the bank. To this end, cheque books are made available to some account holders in the bank who meet all the criteria in regards to owning a cheque book.

The bank's customer owning a cheque book will usually have accounts that are current but a saving account can also serve this purpose.

Please read on the Characteristics of Business here.

6. The drawer of the cheque must sign a dated cheque

A cheque that has no date and isn't signed by the drawer is not considered a cheque. Such is regarded as invalid.

For a cheque to be considered valid, it must have the drawer's signature and a date.

7. The drawee is liable only to the drawer

The drawee or banker on whom the cheque is drawn shall be liable only to the drawer. This is so because in a situation where the cheque is dishonoured, the bearer (payee) has no remedy for such a dishonoured cheque. However, the drawer on his part can still make things right.

Please read on the Advantages and Disadvantages of Cheques here.

8. Only a specific amount can be paid via a cheque

A cheque must contain an order to pay a specific sum of money to the payee.

Note: Apart from the payment of money, if a cheque is drawn to do other things, then such is not considered a cheque.

For instance, a cheque cannot read pay N5,000 to Alfred Ajibola and recharge his phones with a card worth N2,500.

Please read on Bank Notes and Coins as Methods of Payment here.

9. A cheque is payable on demand

When the payee tenders a cheque to the appropriate drawee (bank), the cheque will usually be honoured (made payable) to the payee.

Note: Depending on the type of cheque, the identity of the payee may be ratified.

10. A cheque must be duly dated to confirm its validity

Present on the cheque must be a clearly written date. The date comprises the day, month and year.

Note: In most cases, a cheque is verified as valid for a period of three months (or six months) from the day of issue.

A Post-Dated cheque and an Anti-Dated cheque will not be invalid; rather, their validity is determined to commence from the written date on both cheques.

Please read on Post-Dated Cheque, Anti-Dated Cheque and other Types of Cheque here.

11. The cheque does not require an acceptance or a stamp

On the part of the drawee (or bank), the cheque requires neither a stamp nor another form of acceptance.

There is this caveat among banks to mark a cheque as "good" for the purpose of clearance. Such markings aren't considered as a cheque's acceptance.

12. A cheque may be payable to the drawer himself

A cheque drawn or writen by the drawer may be made payable to the drawer; and such cheque will be honoured.

Note: Often times, we see cheques been made payable to the bearer at his or her demand.