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Difference between Promissory Note and Cheque






No               

                   Cheque

              Promissory Note 


1

Meaning of Cheque –

      A cheque is an order to a bank to pay a stated sum from drawer's account, written on a specially printed form.
               

Meaning of Promissory Note –

             A promissory note is an unconditional promise in writing made by one person to another, signed by the maker, engaging to pay on demand or at a fixed or determinable future time, a sum certain in money to the order of a specified person, or to bearer.

2

Definition –

     According to Section 6 of Negotiable Instrument Act 1881, a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

Definition –

     According to Section 4 of the Negotiable Instrument Act 1881 “Promissory Note” is an instrument in writing (not being a bank-note or a currency-note) containing an unconditional undertaking signed by the maker, to pay a certain sum of money only to, or to the order of, a certain person, or to the bearer of the instrument.

3

There are three parties namely –

1) Drawer,

2) Drawee and

3) Payee

In Promissory Note, there are two parties namely –

1) maker and 

2) Payee

4

It can be drawn only by the account holder of a bank.            


A promissory note can be made by any person.

5

In a cheque, an order for payment is given to the bank

In a promissory note, there is a promise to pay.
6

A cheque is payable always on demand.

It may be payable on demand or after a specified time

7

Grace time –

  Three days of grace are not given in a Cheque           


Grace time –

  Three days of grace are given in promissory notes payable after a specified time.

8

The drawer and payee may be the same person.

The maker and the payee/drawer may not be the same person.

9

No stamps required to be affixed.

In a promissory note, stamps are required to be Affixed.

10

Cheque can be crossed.               

Crossing of the promissory note is not required.

See also...

 Negotiation: Meaning, Definition and Modes of negotiation

 Difference between Promissory Note and bill of exchange

Essentials of Valid Promissory Note

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