Page 53 - Office Practice and Accounting 10

Types of Cheque
a. Bearer cheque : A bearer cheque is made payable to the bearer, i.e., it is payable
to the person who presents it to the bank for endorsement. The language of such
cheque runs thus "Pay to X or bearer....". It is payable to anybody who presents
it at the counter. The bank is under no liability to ascertain that the payment is
made to the right person. Thus it is regraded as unsafe type of cheque.

b. Order cheque : An order cheque is one made payable to a certain person or
ordered one. The language of such cheque runs thus – "Pay to Mr. X or order.....".
An order cheque can be transferred only by endorsement and delivery. Putting
a signature at the back is called endorsement. This type of cheque is safer than
bearer cheque because the bank pays to the person or party whose name is
written on cheque.
If a cheque is made payable to a certain person without addition of the word
‘bearer’ or ‘order’ it is regarded as order cheque.

c. Crossed cheque : Crossed cheques are those which can't be encashed at the
counter but can be presented and collected only by a bank from the drawee
bank. Such cheques are deposited into the account and the account holder
should issue bearer or order cheque to withdraw the amount from the bank. A
cheque is crossed by drawing two parallel line across its face, with or without
certain words.

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