Post Dated Cheques

Hi,

I've asked a few people about this but have got conflicting answers.
If a cheque is post-dated, say for August 1st, but is presented to the bank and cashed on July 29th, should the bank refuse it? Do they have to refuse it?

Thanks

They probably should but chances are the teller won't bother checking the date and will just process it. In my experience banks are pretty lax in such matters.

thanks.

it happened to someone i know a few days ago. they post dated a cheque because they had transferred money from one account into the cheque account and of course it takes 3 working days.

The cheque was presented for payment before the date, the bank cashed the cheque and the account went into negative. The bank then charged a fee for this and are adamant they will not refund the fee.

Any use?

Cheques are sometimes post-dated i.e. the date is a future date. I have considerable difficulty with this. In effect, it is an attempt to make a cheque into a conditional order - which conflicts with the definition of a cheque. It attempts to instruct the banker to pay only if the specified date has passed. Not a good idea.

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ClubMan said:

Any use?

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yes. thanks.
i was onto the financial regulator just there and they told me that post dating a cheque is an instruction to the bank not to process the cheque until the date in question and they have to abide by that instruction.

I'm not sure that that is correct. Based on past experience I would not necessarily trust IFSRA to be correct on such matters. At the very least, as your experience and the article above show, you should not depend on a post dated cheque not being honoured before the date specified. This article is UK specific but may also have some relevance here? I very much doubt that you will get anywhere with the bank in terms of looking for compensation or whatever. However if you feel that you are entitled to it then make a formal complaint and take it to the Financial Services Ombudsman if necessary. The bank may waive any charges unilaterally but pursuing this issue for the presumably small amount involved would hardly seem worth it.

well having got on to the head office of the bank in question (on the advice of the regulator) they say tough, it's in their T's&C's.

Seems like the regulator isnt entirely up to speed either. Or maybe this is down to the confusion being caused by the bank.

Previous AAM discussion on this topic here if anyone is interested

You might win a battle but lose the war. I would imagine that as a banker, I would not be interested in having a customer who post-dates cheques. If they claimed against me for not noticing the date, then I would close that person's account.

You should deal with the customer who presented the cheque early. They should not have presented it. They probably just lodged it in the bank which would be very time consuming for the bank to pull the cheque out of the system and return it to the person who lodged it.

Brendan

Post-dating a cheque does not render it invalid and the cheque is payable on the date fixed by the cheque. Bills of Exchange Act 1882.

Or, in practice, before it seems?

This is a bit of a grey area. The definition of a cheque under the Bills of Exchange Act 1882 says that a cheque must be "payable on demand". A post dated cheque is not payable on demand therefore is not a cheque until the date is due

Why would anyone accept a post dated cheque. If the bank does everything right, it is completly worthless until the due date and in effect you are giving credit to the drawer.

Why would anyone write a post dated cheque when you are leaving yourself open to banking errors like this?

Technically speaking the bank erred in paying the cheque. It should have been refused over the counter or subsequently bounced(for which of course, they'll charge a fee). In the bank's defence, the probablility is that their T&Cs cover off situations where post dated cheques get accepted and paid. Likewise banking law does place obligations on customers and if you signed off on the T&Cs(which you did when you opened your account) and then deliberatly broke them by writing a post dated cheque, it is questionable if a court would support you

In addition, the bank has the defence of "acting in good faith". I see far too many cheques in banking which may be writen clearly to the person who wrote them but are illegible, unclear and incomplete to anyone else trying to figure them out.

MPsox asked:

Why would anyone accept a post dated cheque. If the bank does everything right, it is completly worthless until the due date and in effect you are giving credit to the drawer.

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In the real world of commerce, some people do not have the money now to pay their debts. As part of negotiation, they offer a post-dated cheque. If you have a choice of a post-dated cheque now, or a promise to get a cheque in two months' time, the post-dated cheque is far more valuable.

There is no need to chase the payment any further. If the cheque bounces or is stopped, you have an acknowledgment of the debt in the event of a court case.

Brendan

The issue depends upon whether the date is a material element of the cheque. If it is so, then the issuance of a post-dated cheque is an attempt to make the cheque conditional, which contradicts the basic definition of the cheque, as quoted by Clubman above.

In fact, the Bills of Exchange Act 1882, also quoted above does not resolve the matter.

In terms of day-to-day banking, a banker seldom examines the date on a cheque, and will not lose out in court if he pays a post-dated cheque. However, if the banker is about to bounce a cheque, he will examine it, and will normally bounce it for the reason which does least damage to the reputation of the drawer. So, if you see a cheque bouncing as "post dated", it is very likely that the real but hidden reason for bouncing is lack of funds.