There are following three main parties of a cheque.Before diving into the parties involved, let’s have a brief introduction to cheques. A cheque is a negotiable instrument that guarantees payment to the bearer. It is a written instruction from a bank account holder to their bank, directing them to pay a specified amount to a designated person or entity. Now that we have a basic understanding, let’s proceed to the various parties who participate in the cheque transaction.

Main Parties of Cheque

Drawer

Drawee

Payee

1. Drawer:

Drawer is one who draws a cheque and directs the bank for the payment of specified amount to specified person.

IDrawee:

It is that branch of bank on which the cheque is drawn for payment Hr) MCB or any other Bank.

‘ Payee:

The person who receives the specified amount written on cheque, h may be drawer or any body else.

I X AMPLE:

Suppose, Imran draws a cheque on Habib Bank and gives it to Ali. Here:

— Imran is drawer,

— Habib bank is drawee, and

— Ali is payee.

[OTHER PARTIES]

There may be following other parties of a cheque:

Other Parties of Cheque

Holder —                       Endorser

Endorsee I. Holder:

He is a person who holds the cheque and has legal right to receive । he amount of the cheque.

1. Endorser:

He is a person who signs on the back of cheque to transfer it to any •»lher person.

V Endorsee:

He is a person in whose favour the cheque is transferred.

ELEMENTS OF CHEQUE“

The information, which is stated on the cheque are called elements •i entries of the cheque. These are given below:

1. Name of Bank:

Name of the bank and its branch is written on the cheque.

1. Date:

It is necessary to write date on the cheque. The cheque can be encashed within the six months of written date.

3. Nature of Account:

The nature of account is printed on the cheque to show whether the cheque is concerned to current or saving account.

4. Account Number:

The account number of the depositor is written on the cheque and the bank writes this number itself at the time of issuing chequebook.

5. Cheque Number:

The serial number is always written on the cheque, which helps in the recognition and search of the cheque.

6. Payee:

The name of the person is written on the cheque that can receive the amount of cheque.

7. Word’Bearer’or’Order’:

In case of order cheque, the word ‘order and if the cheque is bearer then the word ‘bearer’ is written on the cheque.

8. Amount in Words:

The required amount is written in words on the cheque.

9. Amount in Figures:

It is also necessary to state the amount of cheque in figure.

10. Signature of Depositor:

For the withdrawal of money from the bank, the signature of depositor is essential.

Parties of Cheque

When it comes to understanding the intricacies of cheques, it is essential to familiarize oneself with the parties involved. From the person who issues the cheque to the one who receives it, each party plays a crucial role in the transaction. In this article, we will delve into the different parties of a cheque, their responsibilities, and their significance in the process. So, let’s explore!

The Drawer

The first party in the chain of a cheque transaction is the drawer. The drawer is the person or entity that writes the cheque and submits it for payment. They are typically the account holder who authorizes the transfer of funds through the cheque. If you are issuing a cheque, you are the drawer.

The Payee

Next, we have the payee. This party is the recipient of the funds mentioned in the cheque. The payee can be an individual or an organization, depending on the purpose of the payment. For example, if you write a cheque to pay your rent, your landlord would be the payee. The payee is the party who ultimately benefits from the cheque transaction.

The Drawee

Moving on, we come to the drawee. The drawee is the financial institution, usually a bank, on which the cheque is drawn. They are responsible for honoring the cheque and making the payment to the payee. When you write a cheque, your bank becomes the drawee, as they are the ones who hold your funds and facilitate the transfer upon presentation of the cheque.

The Holder

It is important to note that the roles of drawer, payee, and drawee can change throughout the life of a cheque. This leads us to the concept of the holder. The holder is the party currently in possession of the cheque. They may acquire the cheque through various means, such as being the original payee or receiving it as a form of payment for goods or services. The holder can present the cheque to the drawee for payment.

The Endorser

In some cases, the holder of a cheque may not be the intended payee. They can choose to transfer their rights to the cheque to another party through a process called endorsement. The party who endorses the cheque is known as the endorser. By signing the back of the cheque, the endorser passes on their ownership rights to the new holder, essentially making the cheque payable to the new party.

The Guarantor

While not always present in every cheque transaction, it is worth mentioning the guarantor. The guarantor is a person or entity that provides a guarantee to the payee that the drawer’s account has sufficient funds to cover the cheque. This guarantee is typically in the form of a separate agreement, such as a letter of credit or a personal guarantee. The role of the guarantor is to instill confidence in the payee that the cheque will be honored.

Conclusion

Understanding the various parties involved in a cheque transaction is essential to ensure a smooth and transparent process. From the drawer to the payee, each party plays a vital role in facilitating the payment. So, the next time you write or receive a cheque, remember the parties involved and their respective responsibilities.