postdated check Wex LII Legal Information Institute

Suppose Jim has to pay a supplier INR 2,000 on 22d May for transactions he made 40 days ago. Since Jim lacks the funds to pay the supplier, he agrees to send the supplier two INR 1,000 cheques, one dated 20th June and the other dated 20th July. Financial stability is commonly regarded as the foundation of any organisation. When a business is involved in sales or purchases, it is necessary to have a practical accounting system. For example, assume that today is January 1, and you’re writing a check. In general, you’d put the current date of January 1 on the check, but you could just as easily postdate it a week and write January 8 on the check, instead.

• The person receiving your check will not be able to cash your check until the day that is indicated on the check.
• In most cases, the recipient can deposit the check at any time, and the bank is free to pay funds out of your account before the date shown on your check.
• Even if your payee is honest, they may make the honest mistake of forgetting (potentially leaving you with bad check fees).
• They do that to ensure the payment is made to the payee on or after the stipulated date.
• So, the date mentioned in the cheque effectively postpones the recording of the underlying transaction.
• In this case, you’ll write a post dated check for $500 by putting a date after the date you’re expecting to be paid.

In some cases, direct evidence may exist that proves that the defendant wrote the postdated check with the intent to cheat the recipient out of goods or services. In such cases, the defendant’s admission, if believed, would provide the required proof of the defendant’s criminal intent to defraud the victim with a postdated check. Postdating a check refers to writing a check but putting a future date on the check instead of the date that the person writes the check. People typically postdate checks intending that the recipient not deposit or cash the check until a later date, because payment is not due until that later date. For example, someone might mail a check for a utility bill before payment is due, and put the bill’s due date (not the date the check is being written) on the check. Realistically, the recipient of a post dated check may never notice that the check has been post dated, and so will record and deposit it at once.

postdated check definition

Postdated payments cannot be withdrawn from an account until the date specified. A cheque prepared with a future date is understanding income before tax on an income statement called a post dated cheque or PDC cheque. As a result, the date on the cheque is after the date the cheque was written.

But in reality, it is not always advisable to issue a post-dated cheque. This is because there could be possibilities that you may not be able to honour the cheque on the given future date. The possible reason could be expected funds have not come into the bank.

• Today, most of the banking process has been automated and banks rarely look at the date mentioned on the cheque.
• They also help keep business activities running without shutting them down due to a lack of funds.
• It won’t be wrong to say that virtually everyone knows what a cheque is, except for millennials perhaps.
• Virtually every adult today would have come across this instrument while either paying for rent in advance or while finalizing a business deal or home loan.

As a bill of exchange, a cheque must be drawn out to a specific banker and intended to be paid on demand. Cheques are one such instrument that can be used in multiple ways to make payments. If the customer sends us a cheque, the funds are credited to our bank on the cheque date. However, it is illegal to write a check when you know you don’t have the funds to cover it, even if you hope to have the funds later. It is also illegal to pretend to pay someone without actually intending to do so. A post-dated check (PDC) is, as the term implies, a check you issue in advance to your payee, but the date indicated is some date in the future.

When it comes to post-dated checks, banks have procedures to ensure they are not processed too early. You can return the check and get your money back up to the day before the check’s expiration date. If that’s the case, you’ll need to contact your bank to specifically inform them not to cash the check until the date appearing on the check. Keep in mind that some banks have a policy where they can honor checks that are made out for a future date. If the writer of the check does not have enough money to cover the check, the recipient will effectively not get paid.

What are the alternatives for post-dated cheque?

However, the recipient must trust that the writer of the check will have enough money in his or her bank account to cover the check value. In this case, you’ll write a post dated check for $500 by putting a date after the date you’re expecting to be paid. As per the provisions of section 138 of the Negotiable Instruments Act, a legal notice should be issued within 30 days of the date the cheque bounced or was dishonoured. Post-dated cheques are normal cheques with a future date written on them. The cheques cannot be honoured by the banks before the date mentioned on the cheque.

A post dated check is a check on which the issuer has stated a date later than the current date. It is used when the issuer wants to delay payment to the recipient, while the recipient may accept it simply because the check represents a firm date on which it will be able to deposit the check. This approach is used to improve the odds of being paid, especially when the issuer has little credit. A person writing a postdated check may violate the law if the check is returned by the bank to the recipient because the maker’s account does not have the funds on deposit necessary to cover the check.

Post Dated Check Example

In the United States, it is generally legal to issue post dated checks. When a person writes a post dated check, the writer of the check intends to have the recipient get paid at a future date. The most common reason why a post dated check is issued is that the person issuing the check does not want to pay the beneficiary before a certain date. By giving post dated checks, you are giving your landlord the comfort that he or she has the potential payment of your rent. If you have taken a short-term loan from the bank, they might want to guarantee their future payments, so they might ask for post-dated cheques.

Is it Legal to Postdate a Check?

They also help keep business activities running without shutting them down due to a lack of funds. From the payer’s standpoint, the best way to prevent payments from being released early is to notify the bank. Cashing a postdated check might be more difficult than depositing it.

To simply put, post-dated cheque is one which is drawn with a date which is after the date on which cheque was written. However, it is the traditional way of making payments, and you can opt-in for newer and more advanced methods of future payments like online transfers, automatic fund transfers, etc. You can also give a standing instruction to the bank to make payment to any account at your desired date. Using these ways, you can avoid all kinds of extra fees and penalties that come with a post-dated cheque. Based on the date mentioned in the cheque, the payee decides when to get it encashed.

Proving Criminal Intent

Post-dated cheques are used as short-term credit or loans and help businesses expand. It allows running business operations without stopping for lack of funds. Drawers also use it to avail products and services before paying for them upfront.