What is the difference between bearer cheque or order cheque?

A cheque may be a bearer cheque or an order cheque. A bearer cheque is made payable to the bearer i.e. it is payable to the person who presents it to the bank for encashment. The language of such a cheque runs thus 'Pay to X or bearer'. It is payable to anybody who presents it at the counter. The bank is under liability to ascertain whether the payment is made to the right person. If a man finds a bearer cheque lying in a street and gets it encased at the bank, the latter is liable for wrong payment. Bearer cheque can be transferred by mere delivery; they need no endorsement.

An order cheque on the hand is a cheque made payable to a certain person or order. The language of such a cheque runs thus 'Pay to Mr. X or order Rupees five hundred only'. An order cheque can be transferred only by endorsement and delivery. It must first be endorsed and the bank must take care to ascertain that the person demanding payment is the right person and that the addition of the word 'bearer' or 'order' thereto it is regarded as an order cheque.