Legal Definitions - for account of

"For account of" is a phrase used on financial documents, such as checks, promissory notes, or bills of exchange, to specify the ultimate beneficiary of the funds or value represented by that document. It acts as an instruction, indicating that while the document might be handled or initially received by one party, the money or proceeds are intended for the benefit or ownership of another, specifically named individual or entity. Essentially, it clarifies who the funds are *really* for, even if an intermediary is involved in the transaction.

• Example 1: Payment to an Agent

  A client hires a freelance graphic designer through a design agency. When the client pays for the design work, they write a check payable to the agency. The agency, knowing a portion of that payment is due to the designer, might endorse the check on the back with "for account of [Graphic Designer's Name]" before depositing it into their own bank, signaling that a specific part of those funds belongs to the designer.

  • Explanation: Here, the agency is the immediate recipient of the check, but the "for account of" instruction clarifies that the ultimate beneficiary of a portion of those funds is the graphic designer, not solely the agency.
• Example 2: Funds for a Trust or Specific Purpose

  A wealthy aunt wants to contribute to her niece's college education fund, which is managed by the niece's parents. The aunt writes a check to the parents but includes the phrase "Pay to [Parents' Names] for account of [Niece's Name] - College Fund" in the memo line or as an endorsement. This indicates the funds are specifically for the niece's education, not for the parents' general use.

  • Explanation: The parents receive the check, but the "for account of" notation clearly directs them to apply the funds for the niece's college education, establishing the niece as the intended beneficiary for that specific purpose.
• Example 3: International Trade Transaction

  An importer in the United States purchases goods from an exporter in Germany. The importer sends a payment to a financial institution in the U.S. that acts as an intermediary for international transactions. This institution then processes the payment and might issue a draft or transfer with the instruction "for account of [German Exporter's Company Name]" to ensure the funds are correctly credited to the actual seller of the goods in Germany.

  • Explanation: The U.S. financial institution handles the transfer, but the "for account of" instruction ensures that the money ultimately reaches the German exporter, who is the true recipient of the payment for the goods sold.