Dishonored Cheque vs. Unpresented Cheque

Attribute	Dishonored Cheque	Unpresented Cheque
Definition	A cheque that is not honored by the bank due to insufficient funds or other reasons	A cheque that has been issued by the drawer but has not yet been presented for payment
Reason for occurrence	Insufficient funds, signature mismatch, post-dated cheque, etc.	Drawer forgets to present the cheque, lost cheque, etc.
Impact on drawer	Charged penalty fees, tarnished credit history	No immediate impact
Legal implications	Potential legal action by the payee or bank	No legal implications

Definition

A dishonored cheque is a cheque that is returned by the bank unpaid due to insufficient funds in the account of the issuer. This can happen for various reasons such as a closed account, a stop payment request, or insufficient funds. On the other hand, an unpresented cheque is a cheque that has been issued by the payer but has not yet been presented to the bank for payment. This could be due to the payee not depositing the cheque, losing the cheque, or simply forgetting to present it.

Causes

The main cause of a dishonored cheque is insufficient funds in the account of the issuer. This can happen if the issuer has overdrawn their account, if a payment has been made that was not accounted for, or if there has been fraudulent activity on the account. On the other hand, an unpresented cheque can be caused by a variety of reasons such as forgetfulness, lost cheques, or the payee not needing to deposit the cheque immediately.

Consequences

When a cheque is dishonored, it can have serious consequences for both the issuer and the payee. The issuer may incur fees from their bank, damage to their credit score, and legal action from the payee. The payee may experience inconvenience, loss of funds, and potential damage to their relationship with the issuer. On the other hand, an unpresented cheque may not have immediate consequences, but it can lead to confusion, reconciliation issues, and potential fraud if the cheque is lost or stolen.

Resolution

When a cheque is dishonored, the issuer must take immediate action to resolve the situation. This may involve contacting the payee to arrange an alternative form of payment, depositing funds into their account to cover the cheque, or disputing the dishonor with their bank. The payee may also need to take action to recover the funds owed to them, such as contacting the issuer, pursuing legal action, or reporting the dishonor to their bank. On the other hand, when an unpresented cheque is discovered, the payee can simply present the cheque to their bank for payment, assuming the cheque is still valid and has not expired.

Prevention

To prevent dishonored cheques, issuers should always ensure they have sufficient funds in their account before issuing a cheque, keep track of their transactions to avoid overdrawing their account, and be cautious of potential fraudulent activity. Payees can prevent unpresented cheques by promptly depositing any cheques they receive, keeping track of their financial documents, and following up with issuers if a cheque has not been presented within a reasonable timeframe.