In the previous post, we talked about What cheque means. But now, we will be speaking on the parties involved in a cheque in lieu with the types of cheque we have
PARTIES TO A CHEQUE
(1)Drawer :Is the person responsible for drawing a cheque. He is the owner of the account on which the cheque is drawn. The drawer is the debtor who signs the cheque and orders the bank to pay his creditor.
(2)Drawee:Is the bank on which the cheque is drawn.
(3)Payee :Is the person to whom the cheque is made payable. The Payee is usually a creditor to the drawer and must present the cheque to the Drawee for settlement.
TYPES OF CHEQUES
(1)Order cheque:Is made payable to a person or firm named on it, a cheque that is drawn payable to Payee or to order can only be cashed by the Payee. The Payee can endorse it to another person and this turns it into a bearer cheque.
(2)Bearer cheque :Is payable to the bearer without any endorsement. It can be cashed over the counter without any endorsement by the person presenting it.
(3)Open cheque :It can be presented and cashed over the counter of the bank which it is drawn. Open cheque is not crossed, it is risky because it can be paid to a wrong person.
(4)Crossed cheque :it has two parallel lines drawn across its face. Crossed cheque cannot be cashed at the counter ;it must be paid into a current account. Some words may be written between the parallel lines e.g "&co" or "non negotiable". This helps to prevent fraudulent practices.