Multiple choice

Which of the following statements is not correct regarding cheque in banking?

  1. It is a type of bill of exchange.

  2. It is a non-negotiable instrument.

  3. There are four main items on cheque.

  4. Parties to regular cheques generally include a drawer and a payee.

  5. Cheques have been in decline for some years, both for point of sale transactions and for third payments.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A cheque is a negotiable instrument, not a non-negotiable one. The defining feature of a cheque as a bill of exchange is its negotiability - it can be transferred to another party by endorsement and delivery. Option A correctly identifies it as a bill of exchange, and option D correctly references the drawer and payee parties that exist in negotiable instruments. Option B's claim that cheques are non-negotiable is fundamentally incorrect.

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