Although a cheque, being a species of a bill of exchange must satisfy almost all the essentials of a bill, e.g., signed by the drawer, containing an unconditional order to pay a certain sum of money, to the order of a person or the bearer, etc., yet there are few points of difference between the two, namely:
1. A cheque is always drawn on a banker, while a bill may be drawn on any person, including a banker.
2. A cheque can only be drawn payable on demand, whereas a bill may be drawn payable on demand or on the expiry of a certain period after date or sight.
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3. A cheque drawn ‘payable to bearer on demand’ is valid but a bill drawn ‘payable to bearer on demand’ is absolutely void and illegal (though a bill can be made payable to the bearer after a certain time) (Sec. 31, The Reserve Bank of India Act).
4. A cheque does not require any acceptance by the drawee before payment can be demanded. But a bill requires acceptance by the drawee before he can be made liable upon it.
5. A cheque does not require any stamp, whereas a bill of exchange must be properly stamped.
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6. Three days of grace are allowed while calculating the maturity date in the case of ‘time bills’ (i.e., bills drawn payable after the expiry of a certain period). Since a cheque is always payable on demand, there is no question of allowing any days of grace.
7. Unlike cheques, a bill of exchange cannot be crossed.
8. Unlike cheques, the payment of a bill cannot be countermanded by the drawer.
9. Unlike bills, there is no system of Noting or Protest in the case of a cheque.
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10. The drawer of a bill is discharged from liability, if it is not duly presented for payment, but the drawer of a cheque will not be discharged by delay of the holder in presenting it for payment, unless through the delay, the drawer has been injured, e.g., by the failure of the bank the drawer has lost the money which would have otherwise discharged the amount of the cheque. However, where the drawer is so discharged, the payee may rank as creditor of the bank for the amount of the cheque.
