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Crossed Check: What You Need to Know About Its Legal Definition
Definition & Meaning
A crossed check is a type of check that cannot be cashed directly at a bank. Instead, the funds from a crossed check must be deposited into the bank account of the payee, the person or entity to whom the check is made out. To create a crossed check, two parallel lines are drawn across the check, typically in the upper left corner. This can be accompanied by the phrases "Account payee" or "Not negotiable." The purpose of crossing a check is to enhance security and ensure that the funds are only credited to the intended recipient's account.
Table of content
Legal Use & context
Crossed checks are commonly used in financial transactions to ensure that payments are secure and traceable. In legal practice, they are relevant in areas involving banking, finance, and contract law. Users may encounter crossed checks when dealing with payments for goods and services, payroll, or other financial obligations. Understanding how crossed checks function can help individuals and businesses manage their finances effectively, and resources like US Legal Forms provide templates for creating checks and other financial documents.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A business issues a crossed check to a supplier for goods delivered. The supplier must deposit this check into their bank account rather than cashing it at the bank.
Example 2: An individual receives a crossed check as a payment for freelance work. They deposit the check into their personal bank account, ensuring that the funds are secure and traceable.
Comparison with related terms
Term
Definition
Key Differences
Open Check
A check that can be cashed or deposited by the payee.
Unlike a crossed check, an open check can be cashed directly at a bank.
Bearer Check
A check that is payable to the person holding it.
Bearer checks can be transferred easily and do not require a bank account for payment.
Common misunderstandings
What to do if this term applies to you
If you receive a crossed check, ensure you deposit it into your bank account rather than attempting to cash it. If you are issuing a crossed check, make sure to draw the lines correctly and consider including the phrases "Account payee" or "Not negotiable" for added security. For assistance with creating checks or understanding financial documents, explore US Legal Forms for ready-to-use templates. If you encounter issues related to crossed checks, consulting a legal professional may be beneficial.
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