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 ?
His driver meets the seller of the car, checks the car and hands over the bank draft.
The bank draft is a counterfeit - but by the time the innocent seller discovers this, the fraudster can't be traced.
If anyone is offered a bank draft bearing either of the codes mentioned above they should contact police immediately.
Mr Neary added: "Everybody is happy until the seller goes to the bank the following morning where he hands over the bank draft and it's a forgery.
Lithuanian crook Marius Rimdeika put a "K" instead of a "C" on bogus Royal Bank of Scotland bank drafts but still managed to rip-off unsuspecting car owners in England.
The court heard evidence from two businessmen who had been offered forged bank drafts worth tens of millions of pounds by the group.
Kevin Meehan, 61, of Stanaway Road, Kimmage, Dublin, was convicted on Monday of handling sterling bank drafts totalling pounds 92,351.
Kevin Meehan, 60, of Stanaway Road, Kimmage, Dublin, has pleaded not guilty to handling sterling bank drafts totalling pounds 185,738 - pounds 4,500 in cash and a cheque for pounds 4,000 - on various dates in 1995 and 1996.
Thomas Meehan, 51, of Dunmore Park, Ballymount, Dublin, admitted handling bank drafts with a value of pounds 148,386.
Forged US bank drafts for millions of dollars, as well as several thousand pounds in cash, were also recovered in the swoop at Clonee in Co Meath.
He was admitted to a mental hospital after he was found wandering the streets in a confused state carrying bank drafts worth pounds 250,000.