Is postdating a check illegal

20 Jun

In the United States, national banks are permitted to pay checks even though payment occurs prior to the date of the check.

According to the Comptroller of the Currency: "A check is a negotiable instrument—the payee, the person to whom the check is written, may negotiate it through the banking system at any time" and check writers seeking redress must restrict themselves to pursuing the payee.

In practice, whether the check writer has any redress against the financial institution where the payee deposited the check may depend on whether it can be shown that the check was accepted over the counter without examination.

In Serbia post-dating cheques is a customary practice in the retail industry.

The retailers will usually accept post-dated monthly cheque payment installments up to several months in advance allowing their customers to pay for expensive goods as a sort of a line of no interest credit.

Writing a postdated (PD) check is legal in Texas and all other U. states; therefore, cashing it before the date on which it is due for payment is not legal.

The reason for writing a PD check is to provide payment to the recipient immediately, but the payee may only collect the money on the later date written on the check.

It will only become cheque on the date shown on it and prior to that it remains a bill of exchange under Section 5 of the Act.The Commonwealth Bank of Australia's rules and conditions for cheques (2014: Section 1.7.6 'Dishonour of cheques') clearly state that a cheque will be dishonoured if it is presented before the post-date as written on the cheque for the reason that, '..cheque bears a date that is in the future.This is known as a post-dated cheque and it cannot be paid until that date arrives.' While this is a sound interpretation of Australian Commonwealth law, for insurance reasons the bank protects itself from possible attack with the condition (2014: Section 1.7.1 'Using your cheques '): 'You authorise us to pay a post-dated cheque (one which is dated with a date in the future) drawn on your account and presented for payment at any time before the date of the cheque arrives.' In Brazil, the drawer may seek damages in Justice if their cheque is cashed in before its due date, according to the jurisprudential orientation of the Superior Court of Justice, as per Summary No. Under the clearing rules of the Canadian Payments Association, a post-dated cheque cannot be cashed prior to the date written on it.The two major issues before the courts are: 1) Post-dated cheques that are stopped by the bank or issuer, causing problems for whoever is to be paid by the cheque for goods or services provided and; 2) the reverse, in which a person is promised goods or services but does not receive them and has to stop the cheque.In the UK the legislation is clear; 'A cheque is a bill of exchange drawn on a banker payable on demand'.