Cheque is a signed unconditional order addressing the bank to credit the amount to the holder of instrument. Cheque is a widely used mode of payment. It is used as a safe mode for making payments, and loss can be minimized if lost. It is an order to a bank by the drawer to pay the amount mentioned in the cheque to the presenter of the instrument.
Parties involved In a Cheque:
- Drawer - A person that issue the cheque for making payment and person who deposit money to make payment is know as Drawer.
- Drawee - Drawee is the bank to whom a drawer gives order to make payment.
- Payee - Payee is the person who presents the cheque for payment .A person who deposited cheque to receive payment from bank is know as Payee.
To know about the types of cheques, click here4.