Order Cheque-Normally, It is seen that some Cheque book issued by the bank is already having the order cheques. Because you will see a word written on the cheque “or order”. And this word defines a cheque as an order check which can be converted into other types of cheques by striking out the word ” or Order“.
But you will see a word written on the cheque ” or bearer” in other Cheque books. In this case, you can make these cheques as an order by striking out the word “bearer” and by writing the word “order” at the place of the bearer.
Contents of this post
In the case of an order cheques, the words ‘or bearer’ is cut by a pen. Such cheques can only be issued to the person whose name is mentioned on the cheque, and the bank will do its background check to authenticate the cheque bearer’s identity before releasing the payment. Further, the payee can pass this cheque to another party by signing on the back of the cheque, who can take payment on the payee’s behalf.
You can identify a cheque as an order cheque when you see the words ‘or order’ printed on a cheque or the word ‘or bearer‘ is strikethrough a pen. Striking out the word ‘bearer’ ultimately makes the cheque an order one.
These are the feature of the order cheques-
These are the steps to fill an order cheque-
points | Order cheque | Bearer cheque |
---|---|---|
Meaning | An order cheque is a cheque payable when the only person named on the cheque presents it at the counter of the bank. | 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. |
Identification word | At the end of the name of the payee, you will find the word ‘order’ on it. | At the end of the name of the payee, you will find the word ‘bearer’ on it. |
Encashment | Only payee or as per his order the cheque can be encashed. | Any person can encash the cheque by any person holding or carrying the cheque. |
Transferred through | Proper endorsement | Simple delivery |
Receipt | The signature of the payee of the cheque acts as an endorsement only. | The recipient’s signature acts as a receipt itself. |
Banker’s Responsibility for payment of funds to the wrong person | Banker or drawee will be held responsible. | No responsibility of the banker or drawee. |
Conversion | The drawer cannot convert an order cheque into a bearer one. | The drawer can convert a bearer cheque into an order 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 can provide an order cheque to your suppliers but should also make it an A/c Payee cheque or crossed cheque.
These are the persons who can get the amount mentioned over the order 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 for up to three months from the date mentioned in the order 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 an order cheque
There are seen many types of cheques which you need to understand. Here is the link for different types of cheques provided plz go through and read- the types of cheques
Yes, the person whose name is mentioned over the cheque can deposit the cheque into his bank account. And this cheque can be endorsed to a third person if required by authorization only.
Yes, It can be endorsed by authorization.
Yes, It is a negotiable instrument and can be endorsed to another person by authorization of sign.
it’s not mandatory to sign behind the cheque.
if a person as 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 an order cheque when the word ” or order” is mentioned over the cheque. And also striking out the word ‘bearer’ ultimately makes the cheque an order one.