post dated cheque

[lookinforinfo]

You can find nothing to abolish the facility to postdate a cheque because that facility never actually existed.

 

Bills of Exchange Act 1882

A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.

 

Couldn't be much clearer-the cheque is payable "on demand or at a fixed or

determinable future time". Sounds like postdating to me. So the date on a cheque

is the date of payment. It may also be in the vast majority of times the date

of issue but not necessarily. Please do not confuse the malpractice of the

banks that no longer recognise postdated cheques with their legal obligations.

We are all too well aware of their ongoing saga with bank charges.

 

 

The 1992 Act is irrelevant, it says nothing about postdating. [/Quote]

 

I mentioned two subsequent Cheques Acts to show that whatever else they stated, there was no mention of cancellation of the ability to post date cheques. That was the relevance.

 

As you say, the British Bankers Association are clear that it is legal to present a postdated cheque and that it is the drawer's responsibility to ensure that this doesn't happen. [/Quote]

 

And the shame is that the BBA can get away with that. It is a sheer abdication of duty by some banks that they place that onus on the drawer

of the cheque when it is quite clear from the 1882 Act, and confirmed by a certain number

of more enlightened banks who still correctly return postdated cheques that the onus should be on the banks to ensure that they do not pay a cheque before the date stipulated on the cheque.

 

I hold my hands up on the magnetic characters-it would appear more logical

to add the amount at the time the cheque is accepted-but it is a fairly

minor detail.

As time progresses, banks are leaving themselves wide open to fraud and

forgery with their cavalier attitude to the cancellation of cheques by the

paying banks. I don't doubt that what you said was true [ about nobody

reading cheques anymore] as I recall talking to

one of my bank managers some time ago and he admitted that they did not

have the time to adhere to their own banking regulations!

[patdavies]

Lookinforinfo, I'm afraid you are wrong in almost all of your interpretations of the above. The magnetic type is in fact added by the drawer's bank, or at least it was when I had the job of doing it.

 

 

From the days when I used to maintain cheque sorters.

 

The value of the cheque is written in the space below the signature and to the right of the account number. The writing is done using magnetisable ink and in the same font as the rest of the line. The remaining characters on this line are already printed in magnetisable ink This writing is done by the clearing bank where the cheque has been sent for clearing - not necessarily the bank where the drawer presents the cheque. Non-clearing banks have neither the facilities nor the need to write the amount in for sorting.

 

The cheques are then sorted using MICR (Magnetisable Ink Character Reader) machines or OCR (Optical Character Reader - hence the strange font) machines.

 

At the time of sorting, nothing else is checked - it is the responsibility of the payee's bank to check signature, etc. It used to be that a teller would not accept a post-dated check - this appears to have gone by the board - banks will even accept cheques that are apparently a year out of date.

[Stornoway]

The problem nowadays is that the person at the counter accepting the cheque is too busy trying to sell you insurance etc to notice whether the cheque is technically correct.

 

In my day we were taught as part of our bank exams that a post dated cheque was illegal. Unfortunately, I cant remember on what technicality it was deemed illegal but that is definitely what we were told!

 

Today, the banks only check the cheques coming off their customers accounts if they are above a certain number (which is well into the thousands). Lower value cheques are assumed to be technically correct and properly signed.

[lookinforinfo]

Well as you can see from the definition of a bill of exchange, postdating is

not illegal, indeed it is enshrined in the definition. However as the banks cut

down on staff and branches, something had to give.

So they frowned on postdated cheques as they knew that if they paid one before its due date and then their customer asked to stop the cheque, that they would be liable.

I expect the banks have worked out how often they can expect to encounter

forged cheques, postdated cheques etc and the chances of them being sued,

balanced against the cost of employing staff to monitor the cancelled cheques more closely and figured that this way was the cheaper option. The

trouble is that once someone finds a way to get under the radar of a bank

and consistently get away with small amounts of around £1000 a time, when

it is uncovered, the amount owed plus damages may come to an amount they

are unwilling to stand.

 

Customs and Excise allow you to pay by postdated cheque in many circumstances providing you inform them at the time to avoid them banking

them immediately in error. And you wouldn't expect them to get involved if

the use of postdated cheques were illegal.

[Zippy Bear]

Writing a post dated cheque is not a problem, provided you have the funds clear in your account at the time the cheque is written, regardless of when it gets paid in. The problem comes, if you don't have the funds available at the time of writing - this is then against the terms and conditions of most bank current accounts, and could be deemed as fraud as you are knowingly writing out a cheque when you have no funds to cover.

 

A bank will generally ignore the date on a cheque, so postdating one is never a good idea as when it gets banked, is out of your control.

 

Just for interest....a lot of banks don't even check the signature on cheques debiting, if they are under a certain amount.

 

The moral of the story can only be, to write and issue cheques only if you have the funds available and are happy for the debit to happen as early as the next day.

 

Cheques will be extinct soon - thankfully.

[lookinforinfo]

I am sorry Zippy but your post is incorrect.

The details that are filled out by the drawer of the cheque are their instructions for the bank to carry out.

The funds have to be in the account when the cheque is due for payment as

per the Bills of Exchange Act 1882 [see post 26] .

 

Many paying banks have given up checking that all cheques are correctly

presented before paying them. In the old days, every cheque was cancelled

by the signature of the person checking the cheques to ensure that the cheque was correctly drawn-viz the date, the payee, the words and figures

agreed and it was correctly signed and there was not a "stop" on the cheque.

 

I think it is disgraceful that many banks now discourage postdated cheques

to avoid their responsibility to monitor cheques. It is time that the banks

were taken to task for reneging on their obligations.

[kittee01]

I have just spoken to Halifax and yes it is illegal to post date cheques as payment

[humbleman]

I have just spoken to Halifax and yes it is illegal to post date cheques as payment

 

They actually have a rule book of their own.

[lookinforinfo]

I have just spoken to Halifax and yes it is illegal to post date cheques as payment

 

Oh then it must be true!

When has it been the case that a spotty bank clerk who probably still has not passed his Part1 Bankers exam is an expert on Law

 

It is not illegal-please read the previous posts. There are many companies that accept post dated cheques as a matter of course including banks that handle new share issues.

Even the British Bankers Association don't say that it is illegal though I do agree that many banks in their T&Cs do ask their customers not to post date cheques.

 

In addition. there are many instances in the Courts where money is proferred by way of postdated cheques [and not always for debts]

and not one Judge has remarked that those payments were illegal.

[kittee01]

I did actually ring Halifax main head office to ask directly- because there seemed so many aspects to this, so as I deal with the Halifax....... It is alarming -but for me I needed to know the code of practice of the Halifax bank........whihc is that the post dated cheques are termed as illegal - Like you I am way beyond the experience and age where I would trust one persons pont of view........ purple hats and slipper will be the order of the day soon!!!

[lookinforinfo]

Kittee, I am not saying that the policy of Halifax is to deter their customers from issuing post dated cheques, but the actual practice is definitely not illegal.

Fortunately, banks are not quite yet in the position of deciding what is Law and what isn't.

[Conniff]

lifi is correct. There is a big difference between policy and law.

 

On the subject of stopping a cheque, a cheque is a prommisory note and once issued cannot be welched on. Even if the amount on the cheque is not owed, they can insist on payment and you would have to claim it back.

 

A promissory note is an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to, or to the order of, a specified person or to bearer

[kittee01]

Thank you for taking the time to respond - I shall ring up Halifax H Q and speak to the the mature gentleman with whom Ihad the initial inquiry (re post dated cheques) . I shall quote the posted GAG contents and get his response... must go back to gardening ... would rather read a book....

[lookinforinfo]

Kittee before you ring them up, please read the piece below [i have already listed it on earlier post here but not sure if you have found it]-

This is an extract from the British Bankers Association on postdated cheques

"Sometimes customers 'post-date' a cheque. This is a date in the future and essentially means that the customer intends that the bank will not pay the cheque earlier than the date inserted on the cheque. If a post-dated cheque is paid in before the date on the cheque the bank may pay it or return it marked ?post-dated'. Most banks do not encourage post-dating cheques. You should be careful to ensure that a post-dated cheque is not presented to a bank before the date on the cheque. Some banks state in their terms and conditions that they will pay a post dated cheque on first presentation if the cheque is otherwise in order."

 

Nowhere does the BBA state that the postdating of a cheque is illegal. And if it were illegal, do you think that the BBA would say that if a PD cheque was paid in before its due date "the bank may pay it or return it marked postdated". And also "some banks will pay a postdated cheque on first presentation if the cheques is otherwise in order". Hardly sounds like the actions of a company if postdating was illegal is it?

 

Banks do not like people postdating cheques because they no longer scrutinise each individual cheque as it arrives at the branch for payment as they used to do years ago. Therefore banks will ask that customers do not post date cheques because they know that if they erroneously pay a cheque

ahead of its due date, they could be held liable should the drawer wish to subsequently place a "stop" on the cheque for instance. It has nothing to do with illegality,

just the banks reneging on a duty they have to observe the instructions of

their customers.

 

You could also ask them to quote the particular Act that outlaws post dating.

Cheques are governed by the Bills of Exchange Act 1882 which are defined as

(1)A bill of exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer.

 

and section 13 of the same Act-

 

13 Ante-dating and post-dating

(1)Where a bill or an acceptance or any indorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance, or indorsement, as the case may be.

 

(2)A bill is not invalid by reason only that it is ante-dated or post-dated, or that it bears date on a Sunday

 

 

Since then there have been additions and amendments to the Act -the Cheques Act 1957 , 1959,1960 and 1992 but nowhere in any of them does the question of post dating arise.

Edited April 24, 2010 by lookinforinfo

[Aequitas]

"Post-dated cheque" is strictly a contradiction in terms, though it is convenient to refer to what looks like a cheque except for the fact that it has a future date on it as a "post-dated cheque". The definition of a cheque set out in section 73 of the Bills of Exchange Act 1882 still applies:

 

A cheque is a bill of exchange drawn on a banker payable on demand.

 

(My italics)

 

If you use one of those pages in what you call a cheque book and fill it out as if it were a cheque except that you date it with a future date, it is not a cheque as it is not payable on demand. It is just an ordinary bill of exchange drawn on a banker payable on or after the date you have put on it. Since it is not a cheque it does not have any of the protection that the law affords to cheques, but not other bills of exchange, and none of the Cheques Acts apply to it, which naturally explains why none of those acts refer to "post-dated cheques".

 

I am no expert on banking law, but so far as I know a bank should not pay a bill of exchange drawn on it before it is due. In practice of course they do for all the reasons set out above. Anyone charged interest or a fee for going into the red because a bank pays a bill of exchange drawn on it before it is due should object strongly, though you may have a problem if your contract with the bank says you should not write "posts-dated cheques".

 

It is unwise to send "post-dated cheques" to businesses as, like banks, they tend not to look at the dates on them; remember that in many businesses cheques get separated from the letters sending them when the post is opened so that anything you say pointing out that the "cheque" is post-dated does not come to the cashier's attention. Reserve "post-dated cheques" for people you feel confident will not bank them before the date on them.