(1) introduction:
Personal transactions or business transactions need payment. All people like to have a cash payment. But sometimes, cash payment carries risk. To secure payment, people seek negotiable instruments like cheques or promissory notes. But it is sorry to say that most of the time, people make the mistake of using a cheque or promissory note.
The reason is that they need a perfect concept of either a promissory note or a cheque. As a result, they make themselves silly by using promissory notes instead of cheques. First, people, including you, must know the difference between a promissory note and a cheque to avoid the hassle.
Please do not skip this page. Today’s article will help you understand the difference between a cheque and a promissory note. Let’s examine the details.
(2) What is Cheque?
Definition of cheque—A cheque is a negotiable instrument drawn on a specific bank on behalf of a person or a company. It is the safest mode for money transfer. There are different kinds of cheques, such as ‘Bearer Cheques,’ ‘Order Cheques,” Anti-Dated Cheques,’ and Post-Dated Cheques.’
Even if there are three parties involved in a cheque.
1. Drawer – A drawer is an account holder who draws the cheque, called a drawer.
2. Drawee – Drawee means a bank where an account holder maintains their account.
3. Payee – This means the name of a person mentioned in a cheque. The cheque amount goes to the mentioned person.
Feature of Cheque – The cheque has some unique features that are identified as cheques. With these features, anyone can quickly identify and use the cheque from their side. The essential features are given below.
- Cheques should come in written and signed by the drawer.
- It indicates an unconditional order.
- The bearer can demand it if he wants to get
- The amount should be specified clearly, both in words and figures.
- It does not need any acceptance.
- It comes to be drawn on a specific bank.
- Cheques contain a particular date.
- Generally, a cheque contains a validity of three months.
- The cheque must mention a date to be valid for payment.
- The cheque must be delivered to the banker during office hours, and the banker only has to pay the sum upon presentation of the cheque.
- The drawer’s signature must match the signature in the bank’s records.
It is not only the cheque concept that will enable you to understand the difference between a promissory note and a cheque. To know the difference properly, you must look at the details of the promissory note.
(3) What is a promissory note?
In the simple meaning of the promissory note, a promissory note is a financial instrument that carries a promise with a fixed amount by the issuer to another party. It generally contains the amount, rate of interest, date, place, maturity date, and the issuer’s signature. In brief, it becomes a written promise to pay a debt.
Feature of a promissory note:
To understand the difference between a promissory note and a cheque, the perfect knowledge of promissory notes will guide you properly.
1. The promissory note should come in the form of a written, and no oral promise should be accepted.
2. It is one kind of promise to pay the money within a time or when it is demanded.
3. The note is wholly signed and stamped by the drawer.
4. The promise to pay is entirely unconditional. That means a certain amount of money should be paid in all cases.
5. Payments in promissory notes should be made through the legal country’s currency.
6. The promissory note should contain detailed information, including the name of the drawer and payee, date of maturity, issuing date, principal amount, and the date.
(4) Difference between cheque and promissory note:
1. The promissory note is one kind of promise made by a person to another person for a certain amount of money. But a cheque becomes an unconditional order issued by the customer for a specified person or the bearer.
2. On a promissory note, there are two parties, the maker and the payee, but in a cheque, there must be a drawer drawee and payee.
3. The promissory note is not conditional, but a cheque is entirely conditional.
4. The maker of promissory notes cannot pay themself, but the drawer can be a payee.
Below is a table showing the difference between a promissory note and a cheque.
To get a clear idea of the difference between promissory note and cheque, a table is given below.
| Cheque | Promissory Note | |
| 1. | What is a cheque? A cheque is an order by the drawer to the bank to pay a mentioned amount from his or her account. | What is a Promissory Note? A promissory note is a written unconditional promise from one to another for payment. It is completely signed by the maker, mentioning a sum of the amount in a certain period. |
| 2. | How do you define a cheque? A cheque is a bill of exchange drawn on a particular bank. | How do you define a Promissory note? Promissory is a legal instrument signed by the maker to the person or his or her bearer. But it is not a currency note or bank note. |
| 3. | To make a cheque, there must be three parties 1. Drawer 2. Drawee 3. Payee | For promissory note, there must be two parties 1. Maker 2. Payee. |
| 4. | It comes to be drawn only by the bank account holder. | Anyone can do it. |
| 5. | An order to the bank to pay the amount for a certain person. | It is a promise. |
| 6. | No stamp is required on a cheque. | On a promissory note, the stamp is necessary. |
| 7. | In issuing cheques, the drawer can be the payee. | Undoubtedly, the drawer does not come as the payee. |
(5) Conclusion:
Before using a cheque or promissory note, you must be very careful. It would help if you remembered the difference between the two. If you are efficient regarding features and working, you can use one at the appropriate place and at the right time.
