What is stale check?

June 21, 2010

1. Nature of stale check

Stale check is a check that is presented to be cashed or deposited at a bank six months or more after the date it was written.

The date when the check is presented to be cashed or deposited in a bank account is known as the payment date. Checks dated six months after this payment date do not have to be honored by a bank pursuant to the Uniform Commercial Code in the United States. This code is a set of laws adopted at the state level that governs financial contracts. The bank receiving a stale check can return the check to the paying bank marked unpaid, request a new check be issued or consult with the person who wrote the check.

For example, XYZ Company submitted a series of checks to Raw Material Services, Inc. to pay for supplies necessary for manufacturing and production. Raw Material Services, Inc, neglected to deposit these checks at the bank. These checks are dated between August 1 and August 31, 2009 and the current date is May 15, 2010. The payment date for these checks is over six months old. If Raw Material Services, Inc. elects to deposit the checks at their bank, they will be classified as stale checks or stale dated checks. Pursuant to the Uniform Commercial Code Act, the bank that Raw Material Service, Inc. elects to deposit the checks to can refuse to cash these checks and may return them to the issuing bank. Raw Material Services, Inc. can request that their bank reconfirm payment rather than returning the checks as unpaid. To confirm payment, Raw Material Services, Inc's bank must request that a new check be issued or that a new payment date can be validly placed onto the existing checks.

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