A cheque and a demand draft are financial instruments for money transfer, distinguished by key differences.
1) Issuance: A cheque is drawn by an account holder. Conversely, a demand draft is issued by the bank at a customer's behest and carries the bank's guarantee.
2) Dishonour Risk: Cheques are susceptible to dishonour due to insufficient funds or signature discrepancies. Demand drafts, however, are honored as the funds are pre-paid to the bank.
Consequently, demand drafts offer a more secure payment method for substantial amounts than cheques.