Cashier’s check, check and money order: definitions, characteristics and differences

Promissory note overview

According to the “Negotiable Instruments Law of the People’s Republic of China”, a promissory note is a note issued by the drawee, who promises to unconditionally pay a determined amount to the payee or holder when the note is presented. Although the bill laws of various countries have different regulations on the contents of promissory notes, they usually include the following elements: clearly marked “promissory note”, unconditional payment commitment, payee information, payment term and place, date and place of issuance, amount and issuance. Signature of the person voting.

Comparison between cashier’s check and bill of exchange

• Difference in nature: A promissory note is an unconditional promise to pay, while a bill of exchange is an unconditional payment order.
• Number of parties: A promissory note has only two parties: the drawer and the payee; a bill of exchange involves three parties: the drawer, the payee and the payee.
• Acceptance requirement: Since the drawer of the promissory note is also the payee, there is no need for acceptance; in contrast, a usance draft requires the holder to present for acceptance.
• Identity of the Debtor: In a promissory note transaction, the drawer is always the principal debtor; in a bill of exchange transaction, this role may change due to acceptance or endorsement.
• Form of issuance: The promissory note can only be issued individually; multiple bills of exchange can be issued at the same time.
• Applicable Rules: Although there are the above differences between the two, all instrument behaviors applicable to bills of exchange also apply to promissory notes.

Check analysis

A check is also defined by the “Negotiable Instruments Law of the People’s Republic of China” and refers to a bill issued by the drawer and entrusting a bank or other financial institution to unconditionally pay a specific amount to the payee or holder when the check is presented. The basic parties to a check include the drawer, payee and payee.

The difference between a check and a money order

• Method of payment: Checks must be payable at sight; drafts can be made at sight or deferred.
• Bill Acts: Checks do not have negotiable acts such as acceptance or guarantee; these acts can be applied to bills of exchange.
• Payer restrictions: The payee of a check is limited to a bank; the payee of a money order can be a bank, a business or an individual.
• Funding relationship: The drawer of the check and the payee need to establish a capital relationship in advance; this is not necessary for the bill of exchange.
• Functional purposes: Checks are mainly used for settlement; bills of exchange can be used not only for settlement but also as credit instruments.
• Issuance quantity: Only one check can be issued; multiple drafts can be issued at one time.

Comparison of checks, bills of exchange and cashier’s checks from the perspective of cross-border e-commerce

In international trade settlement, checks, bills of exchange and cashier’s orders have their own characteristics:

• Securities Attributes: Checks and bills of exchange are securities that entrust others to pay; promissory notes are securities that the drawer is directly responsible for payment.
• Maturity regulations: Checks are all at sight; while bills of exchange and cashier’s checks can also set different maturity dates in addition to sight.
• Acceptance procedures: Usance bills need to be accepted; promissory notes do not need to be accepted because payment has been promised when they are issued; checks do not need to be accepted.
• Prerequisites for payment: Whether the payee of the bill of exchange agrees to pay depends on his or her willingness; the drawer of the cashier’s check must bear the responsibility for payment; the prerequisite for payment of a check is that the drawer has sufficient deposits in the bank.