Discuss the difference between a Cheque and a Bill of Exchange.

(20 marks)

Leveraging my expertise in payment systems at GCB Bank, where I’ve overseen cheque processing under the Bills of Exchange Act, 1961 (Act 55) and BoG’s Payment Systems Guidelines, cheques and bills are negotiable instruments (Topic 5). Post-2019 Act 987, digital shifts highlight their traditional roles in Ghanaian banking.

Differences between a Cheque and a Bill of Exchange:

Aspect Cheque Bill of Exchange
Definition Order to a bank to pay a sum certain from the drawer’s account (Act 55, s.72). Unconditional order to pay a sum certain, not necessarily by a bank (Act 55, s.3).
Drawer/Drawee Drawer is account holder; drawee must be a bank. Drawer issues; drawee can be any person/entity.
Payment Timing Payable on demand only. Can be on demand or at a future date (sight/time bill).
Crossing Can be crossed for added protection (general/special). Not typically crossed; no statutory crossing provision.
Grace Days No grace days; payable immediately. Three grace days for time bills (Act 55, s.14).
Discharge by Payment Payment discharges the bank if in good faith (statutory protection under s.59). No specific banker protection; general discharge rules apply.
Negotiation/Transfer Negotiable if not crossed “account payee”; but limited to demand. Highly negotiable; can be endorsed multiple times.
Usage in Banking Common for routine payments; declining with mobile money. Used in trade finance (e.g., letters of credit); enduring in exports.

Practical example: In Ghana, cheques facilitate salaries but risk truncation under BoG’s cheque truncation system, while bills support international trade, as in Access Bank’s post-DDEP export financing. Banks must verify endorsements to avoid conversion liabilities under tort law.