20. Cheques and other instruments

Abstract

This chapter focuses on the use of cheques and other instruments as a mode of payment in commercial transactions. Under Section 73 of the Bills of Exchange Act 1882 (BEA), a cheque is defined as ‘a bill of exchange drawn on a banker payable on demand’. Section 73 also states that except as otherwise provided in the part of the BEA relating to cheques, the provisions of that Act applicable to bills of exchange payable on demand apply to cheques. All cheques are bills of exchange, and the Section 73 definition of a cheque must be read together with that of a bill of exchange set out in Section 3. In truth, however, a cheque differs significantly from a bill of exchange in a number of ways. This chapter first explains what a cheque is before discussing promissory notes, banker's draft, and travellers' cheques.