POA - Account Owner’s Rights

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Question:

Has there been a change in handling a check when the written and numeric amount differ? During a discussion it was stated there is no longer guidance to determine the correct amount. The employee accepting the check should accept the numeric amount as the correct amount. The rationale is because the checks are read electronically.

Answer:

The model version of the UCC still includes language indicating that if the amount written in words and the amount written in numbers do not agree, the amount written in words is the amount that is properly payable. A separate rule in the UCC deals with encoding errors. The risk of an encoding error falls on the party that did the encoding. For example, if the bank of first deposit encoded an item for the numeric rather than the written amount of the check, the paying bank would not be responsible for any resulting loss. The risk of an encoding error falls on the bank that did the encoding.

First published on BankersOnline.com 10/19/09