Checks: different types of checks and their characteristics, from circular checks to sight checks, through post-dated checks and those defined as “empty” checks.
A check is a bank credit document with which an individual orders the bank to pay a given sum to the person presenting it. The person who orders the bank to make the payment is called the drawer , while the recipient is called the beneficiary . There are different types of checks that have different characteristics: from circular to post-dated. Let’s look at the differences between the different types of checks together .
BANK CHEQUE
A bank check is a credit instrument with which a person (issuer or drawer) who has the availability of money in the bank account orders the bank (drawee) to pay at sight the amount written on the instrument to a person called beneficiary. When opening a current account, the bank will issue a checkbook usually composed of 10 checks.
Each check is composed of two parts:
- The matrix , which remains with the issuer where the check number is reported. The issuer at the time of issuance will fill in the date, amount, beneficiary, and other data.
- The actual check , that is, the credit title that will be filled out and delivered to the beneficiary.
THE BAD CHEQUE
A check is said to be bounced when there are no funds in the drawer’s current account. A bounced check is punished with:
- Criminal penalties : if the cheque is not paid within 60 days of the protest, a criminal trial will be carried out;
- Sanctions in civil proceedings which, as for the bill of exchange, consist in the enforcement action on the issuer’s assets;
- Additional sanctions , such as the refusal of banks to open current accounts or other relationships in the name of the individual in the future.
THE POST DATED CHEQUE
The check must contain the date of issue and, being a sight instrument, must be presented for collection within 8 days if in the city or 15 days if out of the city from the date of issue . In reality, commercial practice often uses the post-dated check . This allows for a payment to be deferred until the moment in which it is presumed that the funds will be available in the current account and represents a form of credit guarantee that is more secure than the bill of exchange due to the criminal penalty.
NON-TRANSFERABLE CHEQUE
As we have already reported, the check is a credit instrument to order and therefore freely transferable by endorsement. But it is not always possible to transfer the check since the law imposes, under penalty of heavy pecuniary sanctions, that checks for an amount greater than 20 million lire carry the non-transferable clause and the wording non-transferable
is written on the front and back .
THE CIRCULAR CHEQUE
A bank draft is a demand note, with which a bank promises to pay a certain amount to the order of the beneficiary unless the draft is stolen .