UCC Refresher – Corporate Checks

By Robert Wilkins

Thanks to all who attended our Legal Update Seminar in February.  There were several great presentations put on by the team here at SW&M and for those who attended, we hope you were able to take away some good SWM Lessons that you can apply to your institutions.

Particular thanks from this author to those who powered through my refresher presentation on the UCC as it relates to check fraud.  It’s not an area of the law that changes a lot, but it certainly is an active area of the law today.  There were so many questions in the queue that we did not have time to get to all of them, so, as promised, here is the first of a few follow up communications to address the questions we did not answer during the presentation.

One concept that we received repeated questions on in the chat was corporate checks — specifically, whether corporate checks were treated similarly to cashier’s checks.  As we explained in the presentation, cashier’s checks are treated differently from standard checks in a number of ways, including, the limited ability to stop payment on cashier’s checks, as well as the fact that cashier’s checks do not go “stale” (or expire).

The California Commercial Code defines a cashier’s check as “a draft with respect to which the drawer and drawee are the same bank or branches of the same bank.”  Any check that meets that definition should be treated as a cashier’s check.  The Commercial Code does not define a “corporate” check, however, it does define “teller’s check.” A teller’s check is a draft drawn by a bank (which includes a credit union) on another bank, or, payable at or through a bank.  These types of checks are often treated similarly to cashier’s checks. For example:

  • Commercial Code Section 3411, which generally prohibits the issuer of a cashier check from refusing to pay the check, similarly prohibits the seller of a teller’s check from stopping payment of a teller’s check (except under very limited circumstances).
  • Commercial Code Section 3312, which outlines the process for stopping payment on a lost or destroyed cashier’s check, also applies to teller’s checks.
  • Commercial Code Section 3118, which provides that an action to enforce an obligation of issuer of a cashier’s check must be commenced within three years after demand for payment is made, also applies to teller’s checks.

Hopefully we have provided some clarity on how “corporate” or “teller’s” checks should be treated.

We still have more UCC questions to get to – stay tuned for a future SWM Lesson, or maybe a bulletin or client pool article in the near future!

About the Author

Robert Wilkins

Robert Wilkins is an Associate Attorney at SW&M with experience in regulatory compliance, trust and decedent accounts, operational matters and cannabis banking. Robert was instrumental in creating the firm’s Cannabis Banking practice. Additionally, he co-authored SW&M’s California Trust Accounts Manual […]

Learn More
Subscribe for Updates

Want the latest news and insights from the world of financial institutions delivered directly to your inbox? Enter your information below to be notified by email whenever SWM Lessons is updated.

  • This field is for validation purposes and should be left unchanged.
Search the Blog
Want to Learn more?

Reach out today to discover how we can help.