Negotiable Instruments Article Review

Topics: Cheque, 21st century, English-language films Pages: 2 (380 words) Published: December 22, 2007

DATE:November 26, 2007
TO: Garth Ferrell
FROM: ***** *****
RE: Client Alert: Check 21 – A Catalyst For Innovation
Anthony, B (2004). Client Alert: Check 21 – A Catalyst For Innovation. Retrieved on November 25, 2007 from


The article reviewed in this paper describes the Check Clearing for the 21st Century Act, or Check 21, which came into effect in October of 2004. This Act allows the use of a substitute check as a negotiable instrument, rather than a paper check. The substitute check is a legal tender and the equivalent of a paper check as long as it fulfills two requirements. The first is that the substitute check must be an accurate representation of both the front and the back of the paper check. It must also include a legend stating that this substitute check may be used in the same way as the original check and that the substitute check should be considered a legal copy.


Check 21 may have been the catalyst for modernizing check processing systems. When all requirements are met for the Check Clearing Act, the process of clearing and settling checks becomes more secure and efficient.


When requirements are met for Check 21, there should be no legal issues. There are three main requirements necessary for the Check Clearing for the 21st Century Act. One of these is that the substitute check must contain all of the legal elements of a paper check and has not previously been presented for payment. The bank must also agree to recompense a client who suffered a loss due to the use of a substitute check rather than a paper check. Finally, the bank must send a consumer notice informing the client of what the substitute check is, what it represents, what to expect from its use and what the client's rights are concerning the Check 21 system. As this article states, this Act's purpose is...
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