A check in is a document/instrument, usually a piece of paper that orders a payment of money from a bank account. It is an important negotiable instrument which can be transferred by mere hand delivery. Check is used to make safe and convenient payment. It is less risky and the dander of loss is minimized. So checks may be defined as a written order of a depositor upon a bank to pay to or to the order of a designated party or to bearer, a specified sum of money on demand. The person who draws the checks is called drawer, the bank on which the checks is drawn in called drawee and the person to whom payment is to be made is called payee. Since our economy runs on the banking system it is highly important to understand the system of check writing and know the importance of writing a check. Today in the era of large enterprises and multinationals companies and decency of one person on another for payments writing a check is something we all have to do at some time. You cannot avoid this phenomenon in the twenty first century.
It is important to understand the system of writing a check. How it works is; the person who writes the check called the drawer usually has a current account also known as checking account or chequing account, where their money was previously deposited. The drawer writes the various details including the money amount, date, and a payee on the check, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated. So checks are basically a type of bill of exchange which was developed as a way to make payments without the need to carry large amounts of gold and silver, or cash. Now there are few different kinds or types of checks; bearer check, order check, uncrossed/open check, crossed check, anti-dated check, post dated check, stale check. When the words “or bearer” appearing on the face of the check are not cancelled, the check is called a bearer check. When the word “bearer” appearing on the face of a check is cancelled and when in its place the word “or order” is written on the face of the check, the check is called an order check. When a check is not crossed, it is known as an “Open Check” or an “Uncrossed Check”. A crossed check cannot be enchased at the cash counter of a bank but it can only be credited to the payee’s account. If a check bears a date which is yet to come (future date) then it is known as post-dated check. A post dated check cannot be honored earlier than the date on the check. If a check is presented for payment after six months from the date of the check it is called stale check. A stale check is not honored by the bank.