Page 114 - DCOM404_CORPORATE_LEGAL_FRAMEWORK

Unit 6: Law of Negotiable Instruments

6.4.1 Specimen of a Cheque Notes

Every bank has its own printed cheque forms which are supplied to the account holders at the
time of opening the account as well as subsequently whenever needed. These forms are printed
on special security paper which is sensitive to chemicals and makes any chemical alterations
noticeable. Although, legally, a customer may withdraw his money even by writing his directions
to the banker on a plain paper but in practice bankers honour only those orders which are issued
on the printed forms of cheques.

6.4.2 Requisites of a Cheque

The requisites of cheques are:
1. Written instrument. A cheque must be an instrument in writing. Regarding the writing
materials to be used, law does not lay down any restrictions and therefore cheque may be
written either with (a) pen (b) typewriter or may be (c) printed.
2. Unconditional order. A cheque must contain an unconditional order. It is, however, not
necessary that the word order or its equivalent must be used to make the document a
cheque. Generally, the order to bank is expressed by the word “pay”. If the word “please”
precedes “pay” the document will not be regarded as invalid merely on this account.

3. On a specified banker only. A cheque must be drawn on a specified banker. To avoid any

mistake, the name and address of the banker should be specifi ed.
4. A certain sum of money. The order must be only for the payment of money and that too

must be specified. Thus, orders asking the banker to deliver securities or certain other
things cannot be regarded as cheques. Similarly, an order asking the banker to pay a

specified amount with interest, the rate of interest not specified, is not a cheque as the sum
payable is not certain.
5. Payee to be certain. A cheque to be valid must be payable to a certain person. ‘Person’
should not be understood in a limited sense including only human beings. The term in fact
includes ‘legal persons’ also. Thus, instruments drawn in favour of a body corporate, local
authorities, clubs, institutions, etc., are valid instruments being payable to legal persons.
6. Payable on demand. A cheque to be valid must be payable on demand and not otherwise.
Use of the words ‘on demand’ or their equivalent is not necessary. When the drawer asks
the banker to pay and does not specify the time for its payment, the instrument is payable
on demand (Sec.19).
7. Dating of cheques. The drawer of a cheque is expected to date it before it leaves his hands.
A cheque without a date is considered incomplete and is returned unpaid by the banks.

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