Parties involved in cheque

Parties involved in cheque clearing system:

There are three parties involved in cheque clearing system. A legal and banking term used to describe these parties are  Drawer, Drawee and Payee.

1. Drawer : A person who writes cheque for making payment to other parties then that person is    called drawer of the cheque. It means he is making an order to his financial institute to make payment of certain amount. In very simple words person who sign the cheque(as per mandate given in bank) for making payments is called drawer of the cheque.
2. Drawee : can be bank or any other financial institution where the cheque can be presented for payment. It is receiver of order from drawer and has to make payment of the amount mentioned in cheque to the person whose name is on cheque.
3. Payee : He is the one who actually receive the payment or he is the person in favour  whom chque is drawn. He is the one whose name is on the cheque.

Note : Account payee cheque will credited directly to payee account only if the name of the payee on the cheque is same as given in bank account. Caution should be taken while making bearer cheque payment, it is advisable to take some identity proof of the person to whom we are making payment.

Note :When a person got the payment of cheque then that cheque is said to be honoured but if due to some reason payment is not received then that cheque is said to be dishonoured.