What is difference between Order Cheque and Bearer Cheque ?

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Order Cheque vs Bearer Cheque – Difference between Order Cheque and Bearer Cheque : A Cheque without any crossing is generally known as Open Cheque whether it is payable to bearer or order. Cheque is simply a written order directing the bank to pay the amount of money mentioned in Cheque from a specific bank account. Cheque generally comes printed in the following form :

PAY ________________________ or Bearer

Also Read10 Common Reasons for dishonour of Cheque

Difference between Order Cheque and Bearer Cheque

What is a Bearer Cheque ?

In Bearer Cheque, the word ‘Bearer’ on the Cheque is not cancelled. The bank can make the payment in cash to the person whose name is stated in the Cheque or Bearer of Cheque who present it over the counter for payment.

PAY ________________________ or Bearer

The holder of Cheque simply present it over the counter and no identification is needed. Holder can encash it from bank by simply putting his signature on back of the Cheque. The signature is just evidence that encasher has received the payment from the bank.

Also ReadWhat is effect of different types of crossing on Cheques in banking ?

What is Order Cheque ?

In case of Order Cheque,the word Bearer written on Cheque is cancelled as below :

PAY _________________________ or Bearer

After cancellation of word “Bearer”, Cheque becomes an Order Cheque. An order Cheque can be paid only to person whose name is written on Cheque.

When an order Cheque is presented for payment, Identification is insisted upon by the bank to ensure that payment is being made to right person. As per negotiable instrument act 1881, if a cheque is to be made payable to order, the payee name must be specified on the Cheque.

An order Cheque can be negotiated to another person by the endorsement of the transferer.

2 COMMENTS

  1. A CUSTOMER “X” ISSUE A BEARER CHEQUE PAYEE NAME “SELF” AND SIGN THE CHEQUE FRONT SIDE AS WELL AS BACK SIDE TWO SIGNATURE AND SEND ALONGWITH ANOTHER PERSON “Y” TO TAKE MONEY FROM HIS BANK . WHAT IS THE LEGAL SITUATION OF CASHIER IF HE PAYS THE CHEQUE TO “Y” WITHOUT TAKING HIS SIGNATURE AS SIGNATURE OF CUSTOMER “X” IS PRESENT BOTH SIDE.

    • The purpose of signature on backside of the Cheque is just to acknowledge the receipt of payment. The signature just convey the identity or name of the person who received the payment. Cashier may also demand for mobile number also along with sign just for identification in future.

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