Legal Definitions - cheque

A cheque (pronounced "check" and often spelled that way in American English) is a written, dated, and signed instruction to a bank to pay a specific amount of money from the drawer's (the person writing the cheque) account to a named person or entity (the payee), or to the bearer. It acts as a negotiable instrument, meaning it can be transferred from one party to another, and serves as a common method for making payments without using physical cash.

Here are some examples to illustrate the concept of a cheque:

• Paying a Contractor: Imagine a homeowner hires a plumber to fix a leaky pipe. Instead of paying in cash, the homeowner writes a cheque for the agreed-upon amount, making it payable to the plumbing company. The homeowner signs and dates the cheque, then hands it to the plumber. The plumbing company then deposits this cheque into its business bank account, and the funds are transferred from the homeowner's account to the company's account. This demonstrates how a cheque serves as a formal instruction to the homeowner's bank to release a specific sum of money to a particular payee for services rendered.

• Receiving a Refund: A customer purchases an item from a department store, but later decides to return it. The store's policy is to issue refunds via cheque for non-cash purchases. The customer receives a cheque from the store for the full purchase price. The customer then takes this cheque to their own bank and deposits it, adding the refunded money back into their personal account. This illustrates a cheque being used as a method for a business to return funds to a customer, acting as a directive for the store's bank to pay the customer.

• Making a Charitable Donation: An individual wishes to donate to a local animal rescue organization. To ensure a clear record of the donation and to avoid carrying a large sum of cash, they write a cheque for their desired donation amount, making it payable to the "Happy Paws Animal Rescue." They sign and date the cheque and mail it to the organization. The animal rescue then deposits the cheque into its bank account, and the funds are transferred from the donor's account. This example shows a cheque as a secure and traceable way to transfer funds to an organization, providing both the donor and the recipient with a financial record of the transaction.