Understanding Bank Checks: Types, Endorsement, and Payment

1. Definition of a Check

A document containing an order to pay a specific amount of money, directed to a bank or financial institution where the issuer has available funds.

5. Endorser

A person, other than the drawer, who transmits the check by endorsement.

6. Guarantor (Avalista)

A person who guarantees payment if the principal party fails to fulfill the obligation.

7. Check Modalities

There are three ways of writing a check based on the designated payee: bearer, to order, or nominative.

8. Bearer Check

Payable to any person who submits the title for collection. The document displays the name of a person or the term "bearer."

9. Check to Order

Paid to the person designated or to another party by their order. The title displays the name of a specific person, the words "to the order of," and the name of that individual.

10. Nominative Check

Payable only to the person named on the document. The title indicates the name of a specific person with the proviso "not to order" or an equivalent term.

11. Check Circulation and Endorsement

A check fulfills its role as a payment instrument when transmitted. This transmission varies depending on how the check is drawn:

• Bearer Check: Transmitted through physical delivery.
• Check to Order: Transmitted by means of endorsement.
• Nominative Check: Transmitted in the manner and with the effects of an ordinary assignment.

12. Certified Check

A check where the drawee bank confirms the authenticity and the existence of sufficient funds in the account. It is irrevocable, and the bank is obliged to withhold the required amount to pay the check upon presentation within the deadline.

13. Crossed Check

This type of check restricts the number of people or entities that may be legitimate to collect payment. The payee must be a bank customer or the drawer.

14. General Crossed Check

The title is crossed with two parallel lines, often including the word "company" or an equivalent term.

15. Special Crossed Check

Parallel lines are inserted with the name of a specific bank between them.

16. Account Payee Check

Also known as an accounting check. The purpose of this type is to prohibit cash payment. Payment is effected by an accounting entry, which implies the deposit of the check into the holder's account.

17. Bank Check

Issued by banks at the request of their clients. It does not require the holder to have an open checking account. The bank charges a commission on the amount, usually a percentage, provided it exceeds a set minimum.

18. Payment Procedures

Payment by check is the standard compliance with the order contained in the document. It is a sight instrument, which expires at the time of recovery within the legal deadline. The drawer is liable to pay the amount upon the presentation of the check at the bank.