bearer cheque meaning and details
Bearer Cheque-Normally, It is seen that a Cheque book issued by the bank is having the bearer cheques. Because you will see a word written on the cheque “or Bearer”. And this word defines a cheque as a bearer check which can be converted into other types of cheques by striking out the word ” or Bearer“.
But you will see a word written on the cheque ” or order” in some other Cheque books. In this case, you can make these cheques as bearers by striking out the word “order” and by writing the word “bearer” at the place of order.
Contents of this post
A bearer cheque is the one in which the payment is made to the person bearing or carrying the cheques. These cheques are transferable by delivery, that is, if you are carrying the cheque to the bank, you can be issued the payment. The banks need no other authorization from the issuer to be allowed to make the payment.
You can identify a check as a bearer check when you see the words ‘or bearer’ printed on cheques.
These are the feature of the bearer cheques-
These are the steps to fill a bearer cheque-
points | Bearer cheque | Order cheque |
---|---|---|
Meaning | Bearer Cheque is the one payable to the bearer, i.e. holder who carries and presents the cheque at the bank counter gets the payment. | An order cheque is a cheque payable when the only person named on the cheque presents it at the counter of the bank. |
Identification word | At the end of the name of the payee, you will find the word ‘bearer’ on it. | At the end of the name of the payee, you will find the word ‘order’ on it. |
Encashment | Any person can encash the cheque by any person holding or carrying the cheque. | Only payee or as per his order the cheque can be encashed. |
Transferred through | Simple delivery | Proper endorsement |
Receipt | The recipient’s signature acts as a receipt itself. | The signature of the payee of the cheque acts as an endorsement only. |
Banker’s Responsibility for payment of funds to the wrong person | No responsibility of the banker or drawee. | Banker or drawee will be held responsible. |
Conversion | The drawer can convert a bearer cheque into an order one. | The drawer cannot convert an order cheque into a bearer one. |
If you want to be secure from fraud or misuse of cheques then you should not provide a bearer check to your suppliers at any time. You should check always the word mentioned over the check ” or Bearer” and must strike out ” or Bearer”. You should provide an A/c Payee cheque or crossed cheque.
These are the persons who can get the amount mentioned over the bearer cheques-
A cheque is generally known as an Open check when it is not crossed whether it is made payable to the bearer or order.
Normally, a cheque will be valid up to three months from the date mentioned over the bearer check. Hence after three months from the date on the cheque, it will be invalid and can not be cleared or encashed.
If it is a bearer check
There are seen many types of cheques which you need to understand. Here is the link for different types of cheques is provided plz go through and read- the types of cheques
A bearer cheque becomes an account payee cheque by writing “Account Payee” or crossing it twice with two parallel lines on the left-hand side top corner. The amount will be transferred to the account of the person specified on the cheque. It is considered the safest type of cheque and is also known as a crossed cheque.
Three parties are-
1. Drawer
2. Drawee
3. Payee.
Yes, It is a negotiable instrument.
it’s not mandatory to sign behind the cheque.
if a person self-representing any cheque he doesn’t need to sign behind the check, what if a third party is representing this cheque in a bank he has to sign behind the cheque for the record purpose.
A cheque will be a bearer cheque when the word ” or bearer” is mentioned over the cheque.
An Accountant, GSTP, GST blogger, Website Creator, SEO Builder & Co-founder of the website https://gstportalindia.in for the help of GST Taxpayers of India. Having a perfect accounting experience of more than 10 years in a Private Ltd Company.
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