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MBA – PM0051 : What is the distinction between cheque and bill of exchange.

Posted on: March 14, 2012


MBA – PM0051 : What is the distinction between cheque and bill of exchange.

Answer :- A cheque differs from a bill of exchange in the following respects:
1. Drawee:
A cheque is always drawn on a bank or a banker while a bill of exchange can be drawn on any person including a banker.
2. Acceptance:
A cheque does not require any acceptance while a bill must be accepted before the drawee can be made liable upon it.
3. Payment:
A cheque is payable immediately on demand without any days of grace, but a bill of exchange is normally entitled to three days of grace unless it is payable on demand.
4. Crossing:
A cheque may be crossed but there is no such provision in the case of a bill of exchange.
5. Notice of dishonor:
When a cheque is not met, notice of dishonor is not necessary. Want of assets in the hands of the banker is sufficient notice. It is necessary to give a notice of dishonor in order to make the drawer of a bill liable.
6. Payable to bearer on demand:
A cheque can be drawn payable to bearer on demand. But a bill of exchange cannot be so drawn.
7. Stamp:
A bill of exchange must be stamped, whereas a cheque does not require any stamp.
8. Countermanding payment:
A cheque may be revoked by countermand of payment. The payment of a bill, however cannot be countermanded.
9. Noting and protesting:
A cheque is not noted or protested for dishonor and is generally inland.
10. Presentment:
A bill of exchange must be duly presented for payment otherwise the drawer will be discharged. The drawer of a cheque is not discharged by failure of the holder to present it in due time unless the drawer has sustained damage by the delay.
11. Protection:
A banker is given statutory protection with regard to payment of cheques in certain circumstances. No such protection is available to the drawee or acceptor of a bill of exchange.


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1 Response to "MBA – PM0051 : What is the distinction between cheque and bill of exchange."

Thank you very much. This site was very helpful for me to complete mb0050 0051.too bad our electives are different.

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