Difference between cheque and dd

Answer 1

The following are the main differences between a cheque and a demand draft:

1. A cheque is issued by an individual, whereas a demand draft is issued by a bank.

2. A cheque is drawn by an account holder of a bank, whereas a draft is drawn by one branch of a bank on another branch of the same bank.

3. In a cheque, the drawer and the drawee are different persons. But in a draft both the drawer and the drawee are the same bank.

4. A Cheque can be dishonored for want of sufficient balance in the account. Whereas a draft cannot be dishonoured. Hence there is certainty of the payment in the case of a demand draft.

5. Payment of a cheque can be stopped by the drawer of the cheque, whereas, the payment of a draft cannot be stopped.

6. A cheque is defined in the Negotiable Instrument Act, 1881, whereas a demand draft has not be precisely defined in the NI Act.

7. A cheque can be made payable either to a bearer or order. But a demand draft is always payable to order of a certain person.

M.J. SUBRAMANYAM, BANGALORE