A cheque is an order by the customer of a bank directing his banker to pay on demand, the specified amount, to the order of person named therein or to the bearer According to SEC. 6 of the Negotiable Instruments Act, 1881, the term cheque is defined as “a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.” A promissory note is a financial instrument that contains a written promise by one party to pay another party a definite sum of money, either on demand or at a specified future date Sec. 4 of the Negotiable Instruments Act, “A promissory note is an instrument in writing containing an unconditional order, signed by the maker, to pay a certain sum of money only to or to the order of a certain person or to the bearer of the instrument.” A bill of exchange is a written order binding one party to pay a fixed sum of money to another party on demand at some point in the future. According to Sec.5 of the Negotiable Instruments Act, 1881, “A Bill of exchange is an instrument in writing containing an unconditional order, signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument.

1. CHEQUE

2. CHEQUE
• A cheque is an order by the customer of a
bank directing his banker to pay on demand,
the specified amount, to the order of person
named therein or to the bearer
• According to SEC. 6 of the Negotiable
Instruments Act, 1881, the term cheque is
defined as “a bill of exchange drawn on a
specified banker and not expressed to be
payable otherwise than on demand.”

3. CHARACTERISTICS OF CHEQUE
 A cheque should be in writing
 Properly signed by the drawer
 Contain an unconditional order
 Must be payable on demand
 The cheque should bear a date otherwise it is
invalid
 Right of Action
 It must be drawn on a specified banker
 The amount specified is always certain and
should be clearly mentioned both in figures
and words

4. PARTIES OF CHEQUE
• A check typically involves three parties:
1. Drawer : The customer or account
holder who write the cheque
2. Drawee: The bank on which the cheque
is drawn. Cheque is always drawn on a
specified banker.
3. Payee: The person who is named in the
cheque for receiving payment is called
“Payee”. The drawer and the payee can
be the same person.

5. PROMISSORY NOTE

6. PROMISSORY NOTE
• A promissory note is a financial instrument
that contains a written promise by one party to
pay another party a definite sum of money,
either on demand or at a specified future date
• Sec. 4 of the Negotiable Instruments Act, “A
promissory note is an instrument in writing
containing an unconditional order, signed by
the maker, to pay a certain sum of money only
to or to the order of a certain person or to the
bearer of the instrument.”

7. FEATURES OF PROMISSORY
NOTE
• Written document.
• Unconditional promise to pay a certain sum
• It must be drawn and duly signed by the
maker.
• It must be properly stamped.
• It specifies the name of the maker and payee
• The amount to be paid must be certain, given
in both figures and words.
• Payment is to be made in the country’s legal
currency.

8. PARTIES TO PROMISSORY
NOTE
1. Drawer: The one who makes the promise
to another, to pay the debt is the drawer of
the instrument. He/She is the debtor or
borrower.
2. Drawee: The one, in whose favour the
note is drawn is the drawee. He/She is the
creditor who provides goods on credit or
lender, who lends money.
3. Payee: The one, to whom payment is to
be made is the payee of the negotiable
instrument.

9. BILL OF EXCHANGE

10. BILL OF EXCHANGE
• A bill of exchange is a written order binding one
party to pay a fixed sum of money to another
party on demand at some point in the future.
• According to Sec.5 of the Negotiable
Instruments Act, 1881, “A Bill of exchange is
an instrument in writing containing an
unconditional order, signed by the maker,
directing a certain person to pay a certain sum of
money only to, or to the order of, a certain
person or to the bearer of the instrument.

11. FEATURES OF BILL OF EXCHANGE
• An instrument which a creditor draws upon his
debtor.
• It carries an absolute order to pay a specified
sum.
• It requires to be stamped
• It must be duly signed by the maker and
accepted by the drawee.
• It contains the date by which the sum should
be paid to the creditor.

12. PARTIES TO BILL OF
EXCHANGE
1. Drawer: The person who makes the bill, or
who gives the order to pay a certain sum of
money, is the drawer of the instrument.
2. Drawee: The person who accepts the bill of
exchange, or who is directed to pay a certain
sum, is called drawee.
3. Payee: The person receiving payment is
called the payee, who can be a designated
person or the drawer himself.