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Both **Cheque** and **Demand Draft** are negotiable instruments, the difference between the two are.: :Cheque is issued by customer, whereas Demand Draft is issued by a Bank. :In Cheque payment is made after presenting cheque to bank, whereas Demand Draft is given after making payment to bank. :Cheque can bounce due to insufficient balance . Demand Draft cannot be dishonored as amount is paid before hand. :Payment of cheque can be stopped by drawee, whereas payment cannot be stopped in Demand Draft. :A cheque can be paid to bearer or order. While, Demand Draft is paid to person on order. :In cheque drawer and payee are different person. In Demand Draft, both parties are banks. :A cheque needs signature to transfer amount, While Demand Draft does not require signature to transfer FUNDS.
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Cheque:- It is drawn by an individual directing bank to pay a 3rd person from his account. A major disadvantage of cheque payments is that a cheque can bounce, i.e. if there is no sufficient balance in the drawer's account the payment can be declined. Demand Draft:- A demand darft is a bank directing it's branch (the drawee branch) to pay to the 3rd person. This is more secure way of payment as compared to cheque as this never bounces/ gets declined. Disadvantage- one has to pay the commission involved in making such dd, which is not there in cheque.
Hie Pinky, **DIFFERENCE BETWEEN CHEQUE AND DEMAND DRAFT** :- 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 dishonored. 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.