9 Most Important Differences between Cheque and bill of exchange are mentioned below:
Cheques and bills of exchange are, in many respects, governed by the same rules and principles, as a general rule, the provisions applicable to bills of exchange payable on demand apply to cheques as well. However, there are nine points of difference between the two, as follows:
1. In the case of a cheque, the drawee must always be a specified banker. In the case of a bill of exchange, anybody can be a drawee.
2. A cheque is always payable on demand without any days of grace, whereas a bill of exchange is entitled to three days of grace. (This is discussed later.)
3. A cheque requires no acceptance, and is intended for immediate payment; a bill of exchange must be accepted before the acceptor can be made liable upon it.
4. A bill of exchange must be duly presented for payment; other- wise, the drawer will be discharged. The drawer of a cheque is not discharged by failure of the holder to present it in due time, unless the drawer has sustained damage by the delay.
5. Notice of dishonour is necessary when a bill of exchange is dishonoured. On the other hand, when a cheque is dishonoured, notice of dishonour is not necessary. Want of assets in the banker is a sufficient notice.
6. A cheque need not be protested for dishonour. In the case of bills, it is advisable to do so.
7. The provisions as to crossings are peculiar to cheques only.
8. Some statutory protection is available to the drawee-banker in connection with payment of cheques under certain circustances. (See Ss. 85 and 128, discussed later.) Such protection does not extend to the drawee or acceptor of an ordinary bill of exchange.
9. Under certain circumstances, statutory protection is available to the collecting banker against liability for conversion of crossed cheques. (See. S. 131, discussed later.) No such protection is afforded while collecting an ordinary bill of exchange.