The bill of exchange act defines a cheque as :"A bill of exchange drawn on a banker payable on demand "in other words, a cheque is an order written by the drawer to a bank to pay on demand a specified sum of money to the person named as payee on the cheque. To complete a cheque, the drawer inserts the name of the payee, the amount he is to be paid in words and figures, date and signature.
Features of a cheque
(1)A cheque is an order to pay.
(2)It is an unconditional order.
(3)The amount must be specified.
(4)It must be in writing not paid.
(5)The account number of the drawer is stated.
(6)The name of the bank appears on the cheque.
(7)It is addressed by one person to another.
(8)The name of the payee must be shown on the cheque.
(9)A stamp duty is paid on a cheque.
(10)Amount must be clearly written in words and figures.
ADVANTAGES OF PAYMENT BY CHEQUE
(1)convenience :it is more convenient to Carry cheque about than cash.
(2)Safe means of payment : cheque is a safe means of payment, especially when it is crossed, the risk of loss is eliminated .
(3)A proof of payment :cheque can serve as receipt and a proof of payment.
(4)it saves time and effort :using cheque to pay large sum of money saves time and effort of counting cash.
(5)security:it is safer to carry cheque than cash for security reasons.
PRECAUTIONARY MEASURES TO BE TAKEN WHEN DRAWING A CHEQUE
(1)The signature must be consistent.
(2)The drawer must sign any alterations on the cheque.
(3)It must not be folded.
(4)The amount must be written in figures and words.
(5)The name of the payee should be properly written on the cheque.
(6)The signature must be such that it cannot be easily forged.