Understanding Promissory Notes and Checks

Promissory Notes

Functions similarly to a postdated check regarding the current account. It serves as a payment document delivered to a holder, who cannot make it effective until the date shown on it. Promissory notes are standardized and are issued by banks or companies with a format similar to a check.

A promissory note should contain:

• Title of note
• Pure and simple promise to pay an amount
• An indication of maturity
• Place of payment
• The name of the person to whom payment is to be made

Checks

A very useful method of payment, as its mere delivery transfers the amount of money it represents to another person. The recipient can cash it at the issuing bank or deposit it in another bank for collection.

From a legal point of view, a check is a valuable instrument (a 'title') that incorporates a right (in this case, the right to payment), so its exercise requires possession of the title.

To draw funds by check, there must be an agreement between the customer (drawer) and the bank (drawee).

Check Payment and Non-Payment

A check is typically payable upon presentation (standard check). If presented after the date of issue (including a postdated check on its date), the bank will pay it.

If a check is found unpaid, the victim may seek a court order for an additional 10% of the unpaid amount, in addition to damages related to issuing the check.

Actions for Check Non-Payment

It is necessary that non-payment is evidenced by any of the following means:

• Notarial protest
• A statement from the bank's records
• A dated statement from a clearing or compensation system

Special Check Types

Certified or Guaranteed Checks

The certified check is a regular check where the bank inserts a clause certifying its authenticity and guaranteeing the existence of sufficient funds in the drawer's account for payment.

Crossed Checks

Crossed checks are intended to prevent cash payment over the counter and ensure the funds are credited to an account.

General Crossing

Consists of drawing two parallel bars across the face of the check.

Special Crossing

Inserts the name of a credit institution between two parallel bars.

A general crossed check can only be paid to a bank or a customer of the paying bank. A special crossed check can only be paid to the specific bank named in the crossing, or, if the paying bank is the same as the named bank, it can be paid to its customer.

The law provides for the possibility of prohibiting cash payment and requiring the bank to pay the check exclusively by crediting an account.