Understanding Check Payment Failure and Instrument Types

Causes Preventing Check Payment

The drawee (bank) may refuse payment for several reasons:

• The drawer is not authorized by the bank.
• Insufficient funds are available in the account.
• The signature does not match the bank's records.
• The check is altered in quantity or any of its essential elements.
• The drawer has issued a stop payment order (revocation).
• The drawer is declared bankrupt.

Check Protest Procedures

The protest of a check is a formal declaration presented by the drawee, noted on the check itself, confirming that the instrument was submitted in a timely manner but was not fully or partially paid.

A check submitted on time that is not protested must still be claimed no later than the next business day following the submission deadline.

Limitation and Prescription of Check Rights

Failure to comply with procedural requirements mandated by law causes the holder's rights to expire, thereby extinguishing their exchange rights (statute of limitations). This affects several actions:

• Recourse actions of the last holder against endorsers or guarantors.
• Recourse actions between endorsers or guarantors themselves.
• Direct action against the drawer and their guarantors, provided the drawer proves they had sufficient funds at the time of presentation and non-payment occurred through no fault of their own.

Types of Checks and Their Characteristics

Crossed Check

A check where the drawer or holder draws two parallel lines across the face (obverse). This check can only be charged by depositing it into a bank account.

Account Payee Check

The holder or drawer may prohibit the check from being cashed by inserting the textual clause or expression "for credit note" or similar wording, requiring payment via deposit.

Certified Check

A check certified by the drawee (bank) at the request of the drawer, confirming that sufficient funds are held in possession to guarantee payment.

Non-Negotiable Check

A check where a specific clause restricting transferability is inserted, or one that the law has designated with this character.

Traveler's Check

Checks issued by the drawer (often a financial institution) at its own expense, payable by the principal, or by branches or correspondents both domestically and abroad.

Cashier's Check (Bank Check)

Checks issued by credit institutions, drawn on their own units and funds. They are used for guaranteed payment and internal banking operations.