People can deposit money in accounts {checking account}| at banks, savings and loans, or credit unions receive money, which depositor can withdraw by writing personal checks. Checking accounts are demand deposits for writing checks. Bank promises to pay any person holding check drawn on that account. Bank is debtor. Person is creditor. Bank has legal title to money.
types
Checking accounts {joint account} can have more than one person that can write checks. If one person dies, others still can use account. Checking accounts can pay interest.
fee
Checking accounts typically cost money {service charge}, paid by month or per check. Banks can waive service charges, if a minimum amount is in checking account.
check-writer death
Death of check writer does not void a check. Banks can honor any check up to ten days after death notification.
check error
Banks are not liable for alterations to checks or wrongful endorsements, unless banking standards are negligent. Negligence of check owner typically causes alterations and wrongful endorsements: for example, someone uses a company-endorsement stamp or leaves blank or signed checks available to others.
Signed orders {bill-of-exchange}| {draft from bank} to banks or other parties can agree to pay bearer the amount, on demand or at a fixed time.
types
Bills of exchange {personal check} can be signed orders to banks to pay bearers immediately from checking accounts. Checks {certified check} can carry guarantee of validity of check writer's signature, as determined by bank. Bank immediately withdraws the money from his or her account and assumes liability for check. Checks {cashier's check} can be on bank's account, purchased from bank by individual to provide acceptable payment to a creditor who will not accept personal checks.
Check payees can sign name on back left side {blank endorsement} {endorsement}|, making check payable to any bearer. Payees can write "pay to X" and signature on back {special endorsement}, making X the only person that can cash check. Payees can write "for deposit only" and signature on back {restrictive endorsement}, making check non-negotiable. Payee can write "without recourse" and signature on back {qualified endorsement}, thus limiting liability. Third parties should not accept commercial paper with qualified endorsements.
Checks can be for more than depositor has in checking account {overdraft}|.
Banks can reject checks {stale check} dated more than six months before presentation for payment.
Depositors can command banks to refuse to pay a check holder {stop payment order}|, when check comes to bank for collection. Stop-payment orders can cancel lost or stolen checks, cancel checks if payee failed to provide service or goods, or cancel checks if long time elapsed since check date. Written stop-payment orders are binding on banks for six months, and you can renew them. Oral stop-payment orders are binding for two weeks.
If a bank refuses to pay a check, because it believes account does not exist or has insufficient funds, bank is liable for damages {wrongful dishonor}|, even if act was not intentional.
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Date Modified: 2022.0225