Legal Definitions - crossed check

A crossed check is a type of check that has two parallel lines drawn across its face, often with additional words such as "Account Payee Only" or "Not Negotiable." These markings are a security feature, signifying that the check cannot be cashed directly over the counter at a bank. Instead, the funds must be deposited into a bank account, typically the account of the named payee. This process enhances security by ensuring the funds are traceable and received by the intended recipient, thereby reducing the risk of theft or fraudulent cashing.

• Example 1: Business Payment to a Vendor

  A manufacturing company, "Precision Parts Ltd.," needs to pay its raw material supplier, "Metalsource Inc.," for a large shipment. To ensure the payment is securely received by Metalsource Inc. and deposited into their official business account, Precision Parts Ltd. issues a check for $75,000 and draws two parallel lines across its face, adding the phrase "Account Payee Only."

  This illustrates a crossed check because the markings prevent anyone other than Metalsource Inc. from cashing the check. If the check were lost or stolen, the finder could not simply walk into a bank and get cash for it; it would have to be deposited into Metalsource Inc.'s account, making it significantly more difficult for a fraudster to benefit.

• Example 2: Personal Payment for Professional Services

  Maria hires an independent architect, David Chen, to design an extension for her home. When paying David the final fee of $5,000, Maria wants to ensure the money goes directly into David's bank account for proper record-keeping and security. She writes a check to David and crosses it, adding "A/C Payee" between the lines.

  Here, the crossed check ensures that David must deposit the funds into his bank account. This protects Maria by providing a clear transaction record and prevents the check from being cashed by an unauthorized individual if it were misplaced before reaching David.

• Example 3: Government Refund

  The Department of Taxation issues a tax refund of $1,200 to Mr. Johnson. To safeguard the funds and ensure they are properly received and recorded, the Department sends Mr. Johnson a check that has been crossed with the words "Not Negotiable."

  This example demonstrates a crossed check used by an institution. The "Not Negotiable" crossing means that while the check must be deposited into an account, it cannot be further transferred or endorsed to another party. This ensures the refund directly benefits Mr. Johnson and cannot be easily diverted, adding a layer of security and accountability to the transaction.