July 8th, 2009 10:53 AM by Ron Mastrodonato
Bank not responsible in check dispute
Q: Dear Dr. Don,"John" issues a cheque in favour of "Julie" and adds a condition that the payment is to be made only when Julie fulfills a condition. Julie obtains the payment from the bank without complying with this condition.
John demands damages from the bank for not ensuring the compliance. What is "conditional endorsement," and how is it effective between the parties mentioned above? -- Ricky Requires
A: Dear Ricky,Although the spelling of a few words in your message is not quite cricket for the U.S., I'm assuming you're talking about a U.S.-based financial transaction. You're describing a restrictive (conditional) endorsement of a check. (This is also known as a restrictive "indorsement" in legal terms.)