distinguish between cheque and draft
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Cheque: Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in the maker/depositor’s name with that Bank.
Demand Draft (DD): A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument.
The following are the main differences between a cheque and a demand draft:
A cheque is issued by an individual, whereas a demand draft is issued by a bank.
A cheque is drawn by an account holder of a bank, whereas a draft is drawn by one branch of a bank on another branch of the same bank.
In a cheque, the drawer and the drawee are different persons. But in a draft both the drawer and the drawee are the same bank.
A cheque is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has not be precisely defined in the NI Act.
A Cheque can be dishonored for want of sufficient balance in the account. Whereas a draft cannot be dishonoured. Hence there is certainty of the payment in the case of a demand draft.
Payment of a cheque can be stopped by the drawer of the cheque, whereas, the payment of a draft cannot be stopped.
A cheque can be made payable either to a bearer or order. But a demand draft is always payable to order of a certain person.
Thank you
Yours sincerely,
Samuel
Here is my answer to your question...
Cheque: Cheque is a negotiable instrument instructing a Bank to pay a specific amount from a specified account held in the maker/depositor’s name with that Bank.
Demand Draft (DD): A demand draft is an instrument used for effecting transfer of money. It is a Negotiable Instrument.
The following are the main differences between a cheque and a demand draft:
A cheque is issued by an individual, whereas a demand draft is issued by a bank.
A cheque is drawn by an account holder of a bank, whereas a draft is drawn by one branch of a bank on another branch of the same bank.
In a cheque, the drawer and the drawee are different persons. But in a draft both the drawer and the drawee are the same bank.
A cheque is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has not be precisely defined in the NI Act.
A Cheque can be dishonored for want of sufficient balance in the account. Whereas a draft cannot be dishonoured. Hence there is certainty of the payment in the case of a demand draft.
Payment of a cheque can be stopped by the drawer of the cheque, whereas, the payment of a draft cannot be stopped.
A cheque can be made payable either to a bearer or order. But a demand draft is always payable to order of a certain person.
Thank you
Yours sincerely,
Samuel
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