TeachMeFinance.com - explain certified check
certified check -- a check drawn on funds in a depositor's account that have been set aside to pay the check on demand. The face of the check bears the words "certified," or "accepted," and is signed by an official of the bank or thrift institution issuing the check to signify that (1) the signature of the drawer is genuine and that (2) sufficient funds are on deposit and earmarked for payment of the check.
Certified check -- A check having written across its face the
signature of (usually) the cashier or paying teller of the bank
on which it is drawn certifying to the signature of the drawer
and to the fact that the latter has sufficient funds on deposit
with which to pay it. Funds are held in reserve from the
drawer's account by the bank to meet the check.
When the holder of a check takes it to the bank upon which
it is drawn and has it certified the drawer of the check and
the indorsers, if there are any, are released and thereafter the
holder must look to the bank alone. The bank is absolutely
liable upon the check unless it was "raised" either before or
after certification. The bank by certifying the check guarantees
the genuineness of the signature of the drawer and
certifies that it has in its possession funds belonging to the
drawer sufficient to meet the check and it thereby engages
that those funds shall not be withdrawn by the maker of the
check to the prejudice or loss of any bona fide holder of the
check. But the certification of the check does not imply any further
or greater responsibility or imply that the body of the check
is genuine. When, therefore, a check is raised before certification
the certifying bank cannot be called upon to pay the
amount of the raised check ; or if a bank certifies a raised
check by mistake and pays the same without culpable negligence
it can recover the amount as money paid by mistake
and the same rule applies if the check is raised after certification.
About the author
Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English".
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