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UCC and Check Stale Date

Question: At your Security Seminar I attended I wrote a note to myself that says, "Delete reference to stale date - 6 months." But I can't remember what you said! I checked our account agreement, and we do say on there we won't pay checks over six months old. But I'm not sure why I should take it out. Can you help?

Answer: What I said was that under the revised Uniform Commercial Code, as long as a check is paid in good faith there is no stale date. A financial institution may choose to have a policy of not paying checks over six months old, but liability may come into play if you violate your own policy.

Because we don't check dates on items that come in through the exchange, the UCC says a check is payable any time unless the bank has knowledge that it should not be paid (i.e. - stop payment). Obviously not knowing the date means we have no knowledge. If you have in your agreement with your customer, or in your policy, that you won't pay any checks over six months old ... and then you do... you're cooked! A customer can come back and say you violated your agreement/policy.

You can vary your agreement with your customer under the UCC - but usually we like to vary the agreement in our favor! That's why I suggested you take that reference to six month old checks out of your deposit agreement.

Copyright © 2005 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 14, No. 12, 1/05

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