Though a cheque resembles a bill of exchange in many respects but it is also a different instrument in other respects. Point out which one of the following statements regarding difference between cheque and bill of exchange is incorrect.

Option A: A cheque does not require acceptance but a bill of exchange requires it

Option B: A cheque is not intended for circulation but a bill of exchange is intended.

Option C: A cheque is not entitled to some days of grace but it is in case of bill of exchange.

Option D: A cheque is dishonored by non- acceptance but this is not so in case of bill of exchange

Correct Answer

Option: d

Explanation

Distinction Between Bill of Exchange and Cheque 1. A cheque is always drawn on a a banker, while a bill of exchange may be drawn on any one, including a banker. 2. A cheque can only be drawn payable on demand; a bill of exchange may be drawn payable on demand, or on the expiry of a certain period after date or sight. 3. A cheque does not require acceptance and is intended for immediate payment while a bill of exchange must be accepted before payment can be demanded. 4. A grace of three days is allowed in the case of payment of a time bill of exchange, while no grace is given in case of a cheque. 5. The drawer of a bill of exchange is discharged, if it is not presented for payment, but the drawer of a cheque is discharged only if he suffers any damage by delay in presentation for payment. 6. Notice of dishonour of a bill of exchange is necessary, but not in the case of a cheque.

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