A demand cheque, although the term isn't universally standard, generally refers to a standard cheque that is payable immediately upon presentation to the bank. In essence, all regular cheques are technically "demand cheques" because the bank is obligated to pay the specified amount to the payee immediately if sufficient funds are available in the drawer's account.
Here's a breakdown to clarify:
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Core Function: A demand cheque functions as a written order from an account holder (drawer) to their bank, instructing the bank to pay a specific sum of money to a designated recipient (payee) upon presentment of the cheque.
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Immediacy of Payment: The defining characteristic is that the payment should be made on demand, i.e., as soon as the cheque is presented at the bank. There isn't typically a waiting period unless verification issues arise or insufficient funds exist.
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Synonymity with Regular Cheques: In most contexts, the term "demand cheque" is redundant because virtually all standard cheques operate on this principle of immediate payment upon demand. Unless the cheque is specifically post-dated (dated for a future date), it's considered a demand instrument.
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Distinction from Other Instruments: It's important to distinguish a demand cheque (a standard cheque) from other payment instruments such as a demand draft, which is prepaid and issued by a bank itself, guaranteeing payment. A demand draft is essentially a banker's cheque.
In Summary: A demand cheque is essentially a regular cheque that instructs the bank to make immediate payment to the payee when presented, assuming sufficient funds are available. The term emphasizes the "on-demand" nature of the payment.
