Cheques – what they are

Cheques are a paper-based payment instrument that allows deposit account holders to handle funds that are immediately available.

The supply of cheque forms is based on a contract between the bank and the customer (cheque agreement). Banks are not obliged to provide their customers with cheque books.

Cheques have no legal tender, i.e. no one is obliged to accept cheques as payment for any good or service.

 

Players involved in payments by cheque

Payments by cheque include, inter alia, the following players:

  • Drawer – the person who writes out the cheque;

  • Drawee – the bank issuing the cheque;

  • Payee – the person who receives the cheque and who will benefit from the amount written on the cheque.

 

Mandatory cheque items

Cheques provided by Portuguese banks to their customers are standardised, i.e. they follow the same model, format and mandatory text.

Standardised cheques contain:

  • Pre-printed items – the word ‘cheque’, the name of the bank that pays the cheque and the place of payment;

  • The spaces necessary for the registration of the other mandatory items – the order to pay a certain amount, the date, the place of issue and the signature of whoever writes out the cheque.

Only documents containing all the mandatory items referred to above may be legally considered to be cheques.

 

Options for issuing cheques

  • Nominal cheque – cheque on which the name of the payee is indicated;

  • Cheque to bearer – cheque on which the name of the payee is not indicated;

  • Cheque to order – a cheque containing the expression ‘à ordem de’ (’to the order of’) in which its payee can endorse it to a third party (person/entity);

  • Cheque not to order – cheque that contains the expression ‘não à ordem’ (’not to order’), which can only be paid to the payee indicated therein and cannot be endorsed to third parties;

  • Crossed cheque – cheque crossed by two parallel and oblique lines, usually placed in the upper left-hand corner, which can be of two types:

    • General crossed cheque (if nothing is written between the parallel lines) – the cheque can be deposited in any bank, and can only be paid at the branch of the payer’s bank if the payee is also a customer of the same bank;

    • Special crossed cheque (if the name of a bank is written between the parallel lines) – the check can only be deposited in the bank indicated between the lines, although it can be paid at the branch if the bank indicated is the drawee and the payee is a customer of the bank;

  • Certified cheque – cheque on which the bank places a stamp certifying that sufficient funds are available for the payment on the date of the endorsement; the amount of the cheque will be held captive in the account of the issuer for a period of no less than the legal time limit for presentation for payment (as a rule, eight days);

  • Bank cheque – cheque that is issued by a bank on an account of that same bank.

A cheque may meet several of these characteristics.