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#1638766 - 12/14/11 02:44 PM Blank check
Pup Offline
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Pup
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If a customer presents a check with a blank payee line and adds his name as payee, is that an alteration?

I grew up hearing about the proverbial "blank check". If it's signed, it's good. There is a lot of talk about this being an alteration, and if it is, there is a 3 year warranty by the BOFD.

Open to interpretation or is there a cut and dried answer?

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#1638785 - 12/14/11 03:17 PM Re: Blank check Pup
doobydoobydoo Offline
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Not too experienced with this and long since removed from the teller line... but fundamentally, if that person had filled in their name in the car instead of your branch, you would never have known.

So i cant believe this would be an alteration.
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#1638787 - 12/14/11 03:09 PM Re: Blank check doobydoobydoo
Matt_B Offline
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I suppose it's not any different than Mom signing a check and handing it to kid to pick something up at the store. Of course if they wrote it for $50 over and got cash back, not sure how that would pan out!
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#1638792 - 12/14/11 03:16 PM Re: Blank check Matt_B
John Burnett Offline
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1. Alterations are covered under 4-406 in the UCC, and they are subject to a one-year statute of limitations as between the account holder and his bank (shorter in some states and under the deposit agreements of many banks).

2. The completion of a check is not an alteration unless the issuer of the check can prove that the completion was not authorized. (UCC 3-115)
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#1639126 - 12/14/11 09:35 PM Re: Blank check John Burnett
RayLynch Offline
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UCC Section 3115 defines the term "incomplete instrument" and provides in subsection (c) that there is an "alteration" if "words or numbers are added to an incomplete instrument without authority".

The term "alteration" is defined in UCC section 3407. 3407(a)(2) provides that there is an alteration if there is an "unauthorized addition of words or numbers or other change to an incomplete instrucment relating to the obligation of a party".

While the unauthorized insertion of a payee's name in the blank Pay To Order line will create an altered check, the drawee bank is not necessarily liable for the payment of the check even if its customer should make a timely claim under 4406. UCC Section 3407(c)(2)provides that with respect to an "incomplete instrument", a drawee bank that pays a fraudulently altered check "in good faith and without notice of the alteration" may enforce rights with respect to the check "according to its terms as completed":

(c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument (1) according to its original terms, or (2) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.


Last edited by RayLynch; 12/14/11 09:37 PM.
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