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 ?
The banker's draft may be forfeit but we are not sure what would happen to the money.
Because I'd paid by banker's draft I didn't have any comeback.
The vehicle was sold privately by an unsuspecting owner to a buyer with what appeared to be a genuine banker's draft that later turned out to be a fraud.
Baker was given time to get the money together to repay victims and the court was told a banker's draft had been drawn up for pounds 200,000 as the first payment.
People who bought cars on HP will probably be ok and if they paid for a service or goods over pounds 100 with a credit card they will be covered but if they paid with cash, cheques or a banker's draft we will need to get into the small print and they could have a problem.
You can have a cheque, banker's draft, an electronic transfer to the account of your choice - or bundles of used notes delivered to your door.
IT'S 18 months since we carried the story of the motorist who sold his pounds 16,500 Audi A4 Cabriolet, thinking that accepting a banker's draft would guarantee payment.
Mrs Gillingham arranged to exchange the ring and the cash at Hockley rail station in Essex on Saturday May 7, with Moon sending a text message to her before their meeting to say he was going to pay with a banker's draft rather than cash.
I don't trust a cheque or banker's draft, and I'm worried about handling pounds 3,000 in cash.
He became suspicious when the firm then asked for a further pounds 15,000, but by then the money had already been transferred by banker's draft, so there was no way of retrieving it.
20 Never accept a cheque or banker's draft from someone unless you know they're trustworthy.
Alec said: "They told me the car had been bought with a fake banker's draft but it was legally mine and not to worry.