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• A check provides a safe means of transferring money and serves as a receipt when paid and canceled by the bank.
• The bank must honor a check when it is properly drawn against the money the drawer has on deposit, or the bank will be liable to the drawer for damages.
• The UCC provides that, with respect to the liability of the drawer, a reasonable length of time for presentation for payment is 30 days after the date appearing on the check or after issue (the date the check is actually written), whichever is later. • A bank may pay a check presented more than 30
days after its date, but it is not required to do so. • Stale check: A check presented more than six months
• Liability• If a drawer of a check has the bank certify it,
he or she remains conditionally liable for payment of the check until the holder can reasonably present it for payment.
• However, when a check is certified at the request of the payee or holder, while the drawee is still responsible for eventual payment, the drawer and all prior indorsers are released from all liability.
• The reason is the payee or holder could have requested payment instead of certification.
• Sometimes called an official check, a teller’s check, or a bank check.
• It is issued by the cashier or other designated officer of a bank and drawn against bank funds.
• A depositor may request such a check when he or she intends to use it to pay for merchandise from an out-of-town dealer who will not accept a personal check.
• A cashier’s check is made payable either to the depositor who purchases it from the bank or to the person who is to cash it.
• Bad Checks• Bad check: One against a bank in which the drawer
has insufficient funds on deposit to cover the check or no funds at all.
• It is a criminal offense for a person to intentionally issue a check drawn on a bank in which that person has an account but has insufficient funds on deposit.
• Forged and Raised Checks• Forgery: The act of fraudulently making or altering a
note, check, draft, or some other document, causing the financial loss of another.
• Both the intent to defraud and the creation of a liability must be proved in order for an act to constitute forgery.
• A person who commits a forgery is guilty of a crime.