A check is a monetary document of a strictly established norm, containing an order from the owner of an account in a credit institution to pay the check holder upon presentation of the amount of money indicated in this document.
A check is a written order of the payer to his bank to pay a certain amount of money from his account to the check holder.
Let’s explain some terms:
The drawer use to be a person who use to have funds in the bank, which he has the power to dispose of by issuing checks.
Check holder – the person in favor of whom the check was issued.
Payer – the bank where the drawer’s funds use to be located.
Endorser – a person who transfers the rights of a check to another person by means of a transfer note (endorsement).
Endorser – a person who receives rights under the endorsement.
The ability to be a real payer of a check is endowed only with credit institutions licensed to engage in banking activities.
A check, as a short-term currency document, does not have the status of legal tender. Their release is entirely determined by the needs of the commercial turnover. Its main purpose is to be a tool for the disposal of funds in the current account, a means of non-cash payments.
The relationship between the drawer and the payer is built on the basis of a check agreement, which creates the obligation of the payer bank to fulfill its obligations to the drawer to pay the check, provided that the latter observes all the necessary formalities.
Types of checks
Depending on the type of settlement, cash and settlement checks are distinguished.
Cash checks are used to pay them to the holder of cash at the bank. This is a document of the established form containing the order of the enterprise to the bank institution on the payment of the amount indicated in the check from the drawer’s account in cash.
A settlement check is used for non-cash payments. This is a document of the established form, containing an unconditional written order of the drawer to his bank to transfer a certain amount of money from his account to the recipient account funds (check holder).
Cash checks are covered and uncovered.
Payments on uncovered checking checks are guaranteed by the bank. The bank guarantees to the drawer in case of a temporary lack of funds in his account, payment of checks at the expense of the bank.
Funds for covered settlement checks are pre-deposited by the issuing client in a separate bank account “Check checks”, which provides a guarantee of payment.
Currently, according to the instructions of the Central Bank, it is envisaged to use only covered settlement checks in calculations. It can be your cheap checks online as well.
A type of settlement check is a crossed check, on the front side of which two parallel lines are drawn. The meaning of cross-linking is to restrict the use of such a monetary document in a circle of holders. Distinguish between general and special crossings.
If there is no designation between the lines, or there is a “banker” or equivalent mark, then such crossings are common. It means that the check can be paid to any bank for collection.
Special crossing is an indication between the marked lines of the name of the bank to which the check must be presented for payment.
Thus, a general crossing can be turned into a special, while a special cannot be turned into a general one, since strikethrough of the cross or the name of the bank is considered invalid.
Both the person who wrote the check and the check holder can cross. A crossed check cannot be directly exchanged for cash – it can be paid through a credit institution and nothing else. In this case, the following scheme applies: the owner of the check submits it to the bank, which transfers the corresponding amount from the account of the organization or the individual who issued this security to the account of the person who is the bearer of the crossed check.