Understanding Checks: Types, Endorsements, and Payments
People Involved in the Payment of a Check
People involved in the payment of a check:
Classes of Checks
- Bearer: Can be paid to the person who presents it for collection.
- Nominee: Intended for a specific person or entity.
- Nominative in-command: Names a person or entity so that it can be transmitted by endorsement.
The Endorsement
The endorsement is a provision that serves to pass the check. The person who transmits the check is the endorser, and who receives it is the endorsee.
A check payable to the order does *not* prohibit endorsement.
Special Checks
- Crossed General Check: Can only be paid by deposit into the holder’s account.
- Crossed Special Check: Can be submitted for offsetting receivables and revenue in the current account holder.
- Conformed Check: All data is consistent and can be satisfied.
The Payment of the Check
The holder of a check must present it for payment within the following periods:
- Checks issued and payable in Spain: 15 days.
- Checks issued overseas (within Europe): 20 days.
- Checks issued outside Europe: 60 days.
An order not to pay a check has no effect within the deadline, except in cases of theft or loss.
Partial Payment of the Check
When the current account of the drawer (lliurador) does not have sufficient funds to meet the full payment, the bank is obligated to pay the available balance in the account at the time of presentation of the check.
The Guarantee
A guarantee is a formula that allows a third person to guarantee the payment of a check if the principal obligor does not.
A credit is a document that allows the holder to purchase goods and services without immediate payment.
Amounts Claimable by the Holder
The holder can claim the following amounts from the person against whom the action is running:
- The amount of the unpaid check.
- 10% of the unpaid amount.
- The legal interest rate yield, increased by two points.
- Expenses and compensation for damages.
The Banker
- The issuing bank provides checkbooks at the request of the owner of a bank account.
- The bank deducts the amount of the check from the bank account.
- The bank must always honor a guaranteed check.
- The bank charges a commission for the management services provided to the person who requested the check.
The Receipt
A receipt is a document issued by the person who collects an amount, serving as proof of the amount received. Receipts should be extended on forms intended for this purpose and consist of a stub and the receipt itself.
Business Cards
Business cards are cards issued by commercial organizations.
Electronic Funds Transfer (EFT)
EFT is the operation by which a transfer of funds is made between two accounts. These accounts can belong to two different holders or the same holder, but are opened in different locations, either within or outside the same town.
Drawer (Lliurador) Features
- The signature must be identifiable with the authorized signatures on file with the bank.
- It is not required to include the full name of the drawer.
- If a check is signed by a person without the necessary authorization, that person is obligated by virtue of signing the check.
- The drawer guarantees payment of the check to the holder and any endorsers.
Other Methods of Payment
- Payment on Account: A payment method that involves entering an amount into the account of another owner via a bank form.
- Postal Order: Sending money through the postal service.