The key differences between a cheque and a bill of exchange are as under:
- (1) An instrument used to make payments, that can be simply transferred by hand delivery is known as cheque. An acknowledgment prepared by the creditor to show the indebtedness of the debtor who accepts it for payment is known as a bill of exchange.
- (2) A Cheque is defined in section 6 while Bill of Exchange is defined in section 5 of the Negotiable Instrument Act, 1881.
- (3) The drawer and payee are always different in case of cheque. In general, drawer and payee are the same persons in case of bill of exchange.
- (4) The stamp is not required in cheque. Conversely, a bill of exchange must be stamped.
- (5) A cheque is payable to the bearer on demand. As opposed to bill of exchange, it cannot be made payable to the bearer on demand.
- (6) Cheque can be crossed but a Bill of Exchange cannot be crossed.
- (7) There is no days of grace allowed in cheque, as the amount is paid at the time of presentment of cheque. 3 days of grace are allowed in bill of Exchange.
- (8) A cheque does not need acceptance whereas a bill requires to be accepted by the drawee.
See Also : Nikhil P. Gandhi Vs. State of Gujarat [Gujarat High Court, 15-06-2016]