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Who's responsible if we accept a check that isn't signed?
by John Burnett, BOL Guru
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Question: Our customer wrote a check to one of their subcontractors for payment of a commission. Our customer says that they both agreed that the subcontractor would not cash the check, but would be compensated at a later date. To accomplish this, our customer purposely did not sign the check, so that if the payee attempted to deposit or cash it, it would not clear. Our procedure is to scrutinize signatures on inclearing items that exceed $5000. This item was for $250, therefore it was not checked. The check cleared on 12/30/02. Do we have any responsibility to our customer to reimburse them if we are unable to return the item through FED channels? Is the depositing bank responsible since they accepted an unsigned check?

Answer: You can't push this one back on the other bank after your midnight deadline. After then, it's strictly between you and your customer. Depending on the facts of the situation, the customer might have to eat the check (he'd have to prove damages, which would be difficult if he owed the money) if you dug in your heels. But I suspect that most banks would look at the customer relationship before making that decision.

First published on BankersOnline.com 2/17/03



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