open cheque details
Open Cheque
Normally, It is seen that some checkbooks issued by the bank are already having bearer cheques or order cheques. Because you will see a word written on the cheque “or bearer“, “or order“. These words define a cheque as a bearer cheque or an order cheque that can be used for payment to someone but is not safe. These cheques are called open cheques or uncrossed cheques.
In simple words, an open cheque is a cheque that is not crossed and it may be a bearer and or order cheque. It can be further transferable to the third person.
Contents of this post
An open cheque is an uncrossed cheque. This cheque can be encashed at any bank, and the payment can be made to the person bearing the cheque. This cheque is transferable from the original payee (the original recipient of the payment) to another payee too. The issuer needs to put his signature on both the front and back of the cheque in case of endorsement. Open cheques include bearer cheques or order cheques.
You can identify an open cheque as a bearer cheque or an order cheque when you see the words “Or bearer” or “or order” printed on cheques. And make sure, the cheque should not be crossed or the account payee.
These are the features of the open cheques-
These are the steps to fill an Open cheque-
points | open cheque (uncrossed) | crossed cheque |
---|---|---|
Meaning | An open Cheque is one payable to the bearer or order, i.e. holder who carries and presents the cheque at the bank counter gets the payment. | A crossed cheque is a cheque payable only in the bank account of the person named on the cheque or endorsed third person. |
Identification word | At the end of the name of the payee, you will find the word ‘or bearer’ or ‘ or order on it. | Two parallel lines on the top left corner or anywhere on the cheque is called crossed cheque. |
Encashment | Any person can encash the cheque by any person holding or carrying the cheque. | Only the payee can deposit the cheque into his bank account. No encashment is allowed. |
Transferred through | Simple delivery in “or bearer” cheques and endorsement in order cheques. | 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 an open cheque into a crossed or account payee cheque. | Crossed cheque can be converted into an A/c payee cheque. |
If you want to be secure from fraud or misuse of cheques then you should not provide an open check to your suppliers at any time. You should check always the word mentioned over the cheque ” or Bearer” or order and must strike out “or Bearer, or order”. You should always provide an A/c Payee cheque or crossed cheque.
These are the persons who can get the amount mentioned over the open cheques-
Normally, a cheque will be valid up to three months from the date mentioned over the open cheque. Hence after three months from the date on the cheque, it will be invalid and can not be cleared or encashed.
If it is an open cheque
There are many types of cheques that you need to understand. Here is the link for the different types of cheques provided plz go through and read- the types of cheques
Yes, the person whose name is mentioned on the cheque can deposit the cheque into his bank account. And this cheque can be encashed or transferred to a third person also.
Yes, open cheques can be transferred to the third person by simple delivery or endorsement if required.
No, It is not safe compared to a crossed or account payee cheque. Because account payee cheques can be deposited into the account of the named person only. And it can not be encashed.
Yes, Cash can be withdrawn because the open cheque means, a bearer cheque or an order cheque.
A cheque will be an open cheque when the word ” or bearer” or ” or order” is mentioned over the cheque. And it is not crossed.
it’s not mandatory to sign behind the cheque. but may be required by the bank to check the payee’s identity.
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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