Check in United States

Check Definition

Contracts. A written order or request, addressed to a bank or persons carrying on the business of banking, by a party having money in their hands, on deposit, desiring them to pay, on presentment, to a person therein named, or bearer, or to such person, or order, a named sum of money. The chief differences between checks and bills of exchange are: First, a check is not due until presented, and, consequently, it can be negotiated any time before presentment, and yet not subject the holder to any equities existing between the previous parties. 3 Johns. Cas. (N. Y.) 5, 9; 9 Barn. & C. 388; Chit. Bills (8th Ed.) 546. Secondly, the drawer of a check is not discharged for want of immediate presentment with due diligence, while the drawer of a bill of exchange is. The drawer of a check is only discharged by such neglect when he sustains actual damage by it, and then only pro tanto. 6 Cow. (N. Y.) 484; Kent, Comm. lect. 44 (5th Ed.) p. 104, note; 3 Johns. Cas. (N. Y.) 5, 259; 10 Wend. (N. Y.) 306; 2 Hill (N. Y.) 425. Thirdly, the death of the drawer of a check rescinds the authority of the banker to pay it, while the death of the drawer of a bill of exchange does not alter the relations of the parties. 3 Man. & G. 571-573. Fourthly, checks, unlike bills of exchange, are always payable without grace. 25 Wend. (N. Y.) 672; 6 Hill (N. Y.) 174.

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Legal Issue for Attorneys

Contracts. A written order or request, addressed to a bank or persons carrying on the business of banking, by a party having money in their hands, on deposit, desiring them to pay, on presentment, to a person therein named, or bearer, or to such person, or order, a named sum of money. The chief differences between checks and bills of exchange are: First, a check is not due until presented, and, consequently, it can be negotiated any time before presentment, and yet not subject the holder to any equities existing between the previous parties. 3 Johns. Cas. (N. Y.) 5, 9; 9 Barn. & C. 388; Chit. Bills (8th Ed.) 546. Secondly, the drawer of a check is not discharged for want of immediate presentment with due diligence, while the drawer of a bill of exchange is. The drawer of a check is only discharged by such neglect when he sustains actual damage by it, and then only pro tanto. 6 Cow. (N. Y.) 484; Kent, Comm. lect. 44 (5th Ed.) p. 104, note; 3 Johns. Cas. (N. Y.) 5, 259; 10 Wend. (N. Y.) 306; 2 Hill (N. Y.) 425. Thirdly, the death of the drawer of a check rescinds the authority of the banker to pay it, while the death of the drawer of a bill of exchange does not alter the relations of the parties. 3 Man. & G. 571-573. Fourthly, checks, unlike bills of exchange, are always payable without grace. 25 Wend. (N. Y.) 672; 6 Hill (N. Y.) 174.

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This definition of Check is based on The Cyclopedic Law Dictionary. This entry needs to be proofread.

Practical Information

Note: Some of this information was last updated in 1982

A written order drawn upon a bank by a depositor, requesting the bank to pay on demand a certain sum of money to the bearer, or to the order of some person or corporation named on the face of the check. Postdated check. The holder may transfer a check before the date on which it is payable, but the drawer’s bank will not honor it before that date. A postdated check is a promise to pay rather than an order to pay; therefore, the drawer generally cannot be prosecuted criminally if the check is refused for lack of sufficient funds.

Discrepancy in amounts

The Negotiable Instruments Law provides that the amount expressed in words is the sum payable where there is a discrepancy between that amount and the amount expressed in figures. Banks generally refuse to accept checks with discrepancies in amounts. The holder may endorse it, guaranteeing the correct amount, and deposit the check for collection.

Certification

(See certified check (in U.S. law).)

Time within which check must be presented for payment

The Negotiable Instruments Law provides that a check must be presented for payment within a “reasonable time,” determined by the circumstances of each particular case. Failure to present a check for payment within a reasonable time discharges the drawer from liability to the extent of loss caused by the delay. Thus, if the bank on which a check is drawn becomes insolvent so that the drawer loses the amount he or she had on deposit to meet the check, the loss must be borne by the one who was lax in presenting the check for payment.

Checks that “bounce.”

Occasionally, a check will be returned to the depositor by the bank for some stated reason. “Lack of endorsement” means the depositor failed to endorse the check. “No account” means the maker of the check has no account at that bank. Unless the depositor knows the appropriate steps to take when a check is returned, he or she should consult counsel within 24 hours.

Insufficient funds

One of the reasons why checks “bounce” is “insufficient funds.” A person who, with fraudulent intent, issues a check knowing that he or she does not have sufficient funds for its payment is subject to criminal prosecution in many states.

Death of a drawer

This revokes the authority of the bank to pay. If a bank pays a check without knowledge that the drawer has died, it cannot be held liable for the amount.

Given in full settlement of claim

When the amount of a claim is disputed, a check reciting that it is in full settlement, accepted or collected by the creditor without objection, discharges the debtor’s obligation. A check should be returned at once if the amount is not acceptable.

Forged or raised check

A bank is liable to a depositor for payment of a forged or raised check. The Negotiable Instruments Law provides, however, that the drawer must notify the bank within one year after return of the paid check that it was forged or raised.

Drawn on Sunday or holiday

Technically, a check should not be drawn on Sunday or on a holiday, but few banks refuse payment for this reason.

Endorsement

The endorsement appears on the reverse side of a check. When an endorsed check is received in payment of debts, there are two things to watch. (1) The spelling of the name in the endorsement should correspond exactly with the name of the payee on the face of the check. A check made payable to a business firm should be endorsed in the firm’s name and signed by the authorized person of that firm. (2) Any additional words accompanying the signature. Any wording having unfamiliar legal significance should be a warning to the recipient of the check to consult an attorney.

(Revised by Ann De Vries)

What is Check?

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