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    Stale or Outdated Cheque

    Uploaded by

    Ahsan Sarwar Nabil
    A check becomes stale if more than six months have passed since its issue date. Banks are not obligated to honor stale checks, though they may choose to do so. If a stale check is refused, the holder must contact the issuer for a new check. According to the Uniform Commercial Code, checks dated over six months past the payment date can be returned unpaid by the bank. In the example, checks from August 2009 deposited in May 2010 would be considered stale and could be refused payment under the Code.

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    Stale or Outdated Cheque

    Uploaded by

    Ahsan Sarwar Nabil
    368 views2 pages
    A check becomes stale if more than six months have passed since its issue date. Banks are not obligated to honor stale checks, though they may choose to do so. If a stale check is refused, the holder must contact the issuer for a new check. According to the Uniform Commercial Code, checks dated over six months past the payment date can be returned unpaid by the bank. In the example, checks from August 2009 deposited in May 2010 would be considered stale and could be refused payment under the Code.

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    Banking

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    A check becomes stale if more than six months have passed since its issue date. Banks are not obligated to honor stale checks, though they may choose to do so. If a stale check is refused, the holder must contact the issuer for a new check. According to the Uniform Commercial Code, checks dated over six months past the payment date can be returned unpaid by the bank. In the example, checks from August 2009 deposited in May 2010 would be considered stale and could be refused payment under the Code.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    368 views2 pages

    Stale or Outdated Cheque

    Uploaded by

    Ahsan Sarwar Nabil
    A check becomes stale if more than six months have passed since its issue date. Banks are not obligated to honor stale checks, though they may choose to do so. If a stale check is refused, the holder must contact the issuer for a new check. According to the Uniform Commercial Code, checks dated over six months past the payment date can be returned unpaid by the bank. In the example, checks from August 2009 deposited in May 2010 would be considered stale and could be refused payment under the Code.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Stale or Outdated Cheque

    As per banking custom a cheque (also bankers draft) becomes stale when it
    remains circulation for more than six months, though there is no legal sanction
    in this respect. Such an instrument is not honored by the drawee banker unless
    revalidated by the drawer. But it does not appear established that the drawer or
    the endorser of such an instrument is discharged from liability unless barred by
    limitation of three years.

    A stale check is one that is presented for payment six months or more past the date
    on its face. Banks are under no obligation to cash a stale check unless it is a
    certified check; however, the institution can cash the instrument if it appears to be
    a payment made in good faith. Each financial institution may have its own policy
    on whether to pay or decline these checks.

    Stale checks can be dangerous to a consumer who chooses not to balance his
    checkbook and only refers to his account balance to determine whether or not he
    has money available. It can be easy to forget an outstanding check over the course
    of six months; if one suddenly is presented for payment, it can put the account
    holder into overdraft, racking up fees. It's best to contact anyone who may be
    holding a check beyond a few months to determine if the check has been lost and
    what is causing the delay.

    If a check is refused for payment due to being out of date, the holder must contact
    the original payer and obtain a new check to replace the stale one.

    A stop payment order can prevent the bank from cashing a stale check, but these
    orders often have an expiration and the check may be negotiable after it expires.

    The date when the check is presented to be cashed or deposited in a bank account
    is known as the payment date. Checks dated six months after this payment date do
    not have to be honored by a bank pursuant to the Uniform Commercial Code in the
    United States. This code is a set of laws adopted at the state level that governs
    financial contracts. The bank receiving a stale check can return the check to the
    paying bank marked unpaid, request a new check be issued or consult with the
    person who wrote the check.

    For example, XYZ Company submitted a series of checks to Raw Material


    Services, Inc. to pay for supplies necessary for manufacturing and production. Raw
    Material Services, Inc, neglected to deposit these checks at the bank. These checks
    are dated between August 1 and August 31, 2009 and the current date is May 15,
    2010. The payment date for these checks is over six months old. If Raw Material
    Services, Inc. elects to deposit the checks at their bank, they will be classified as
    stale checks or stale dated checks. Pursuant to the Uniform Commercial Code Act,
    the bank that Raw Material Service, Inc. elects to deposit the checks to can refuse
    to cash these checks and may return them to the issuing bank. Raw Material
    Services, Inc. can request that their bank reconfirm payment rather than returning
    the checks as unpaid. To confirm payment, Raw Material Services, Inc's bank must
    request that a new check be issued or that a new payment date can be validly
    placed onto the existing checks.

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