Certified Check

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Certified Check

A written order made by a depositor to a bank to pay a certain sum to the person designated—the payee—which is marked by the bank as "accepted" or "certified," thereby unconditionally promising that the bank will pay the order upon its presentation by the payee.

A certified check is considered the equivalent of cash since the bank, by its certification, guarantees it to be cashable. No bank is under a duty to its depositors or anyone else to certify checks since it involves the assumption of a new obligation for which it is primarily responsible. It is a commonplace practice, however, and there is usually a small fee for this service. A certified check is often required by a payee who does not want to rely only upon the credit of the drawer, the person who wrote the check.

A payee who requires a drawer's check to be certified ensures his or her right to payment. Not only can the payee seek payment from the certified bank, but if for some reason the bank refuses to pay, the payee retains the right to enforce payment from the drawer. In this situation the bank is primarily liable while the drawer is secondarily liable.

Occasionally the payee or subsequent holder of the check—a person who has been legally given possession and the right to payment—will present the check to the drawer's bank for certification. Although the bank is obligated to cash the check, it need not certify the check because only it, not the drawer or any subsequent endorsers, would be liable for its payment. Some banks will certify a check in such instances only with the approval of the drawer.

If a bank refuses to pay a check that it has certified, its drawer or holder may sue the bank for its wrongful conduct, called dishonor. A certified check, a type of Commercial Paper or negotiable instrument, is governed by Article 3 of the Uniform Commercial Code.

certified check

n. a check issued by a bank which certifies that the maker of the check has enough money in his/her account to cover the amount to be paid. The bank sets aside the funds so that the check will remain good even if other checks are written on the particular account. Like a cashier's check, a certified check guarantees that it is immediately good since it is guaranteed by the bank and the recipient does not have to wait until it "clears." (See: cashier's check)

References in periodicals archive ?
Upon award or rejection of the bid, all Certified Checks or Cashier%s Checks received in lieu of Bid Bonds will be re- turned to the bidders.
Over 20 bidders attended the auction, with certified checks in the amount of $160,000 as a pre-requisite to bid.
The electronic checks will be similar to paper checks in that they are an open payment instrument, which allows for third-party services and a variety of payment options, including travelers', cashiers' and certified checks.
Any Certified Checks or Cashier Checks submitted in lieu of a Bid Bond shall be drawn on a solvent bank or trust company, made payable to Lee County Board of County Commissioners and shall have all necessary documentary revenue stamps attached (if required by law); or
He explained that DOT is working with contractors on such issues as using bid bonds instead of cash or certified checks with bid packages, allowing contractors to transport cranes on at least part of a day before a holiday, expediting payments so that contractors are compensated quicker based on completion of a smaller percentage of work, and setting reasonable goals regarding MBE/WBE contracts and then seeing that the goals are met.
As with paper checks, Electronic Checks will be an open payment instrument, providing for third-party services and a variety of payment options, such as travelers', cashiers' and certified checks.

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