What is the Difference between a Check and a Note?
A check is an order on a third person (the bank) to pay a specified sum and is sometimes described as a three-party instrument (the parties being a drawer, a drawee or payor bank, and a payee.) A note is a promise by the maker to pay a specified sum and might be described as a two-party instrument (the parties being a maker and a payee.) Also, the note does not represent the paying out of assets.
Types of Checks
- Government check or warrant - Instruments payable on demand and drawn by the government, or on the government (i.e. Treasurer of the United States) are generally regarded as government checks. Warrants issued by a state or local government or governmental agencies are also treated as checks if they are payable on demand.
- Cashier check -A cashier's check is simply a bill of exchange or a draft drawn by a bank on itself. In many instances, cashier's checks are purchased by a customer of the issuing bank to be used for a payment when a check signed by an authorized representative of the bank is desired. The purchaser is not a party to the cashier's check unless he is named as payee or he adds his own signature or endorsement to the instrument.
- Teller check or bank draft - A teller's check is a draft drawn by a bank on another bank or payable at or through a bank. A "teller's check" is equivalent to the term "bank draft." A similar term is "banker's check," defined as a check where the drawer is a banker, or the duly authorized agent of a bank, and the check is drawn on funds either in the bank where he is an officer or agent or in a correspondent bank where his own bank has credit.
- Certified check - A certified check is a check accepted by the bank on which it is drawn. Acceptance may be made by the bank's signed agreement to pay the check as presented or by a writing on the check that indicates that the check is certified.
- Traveler's check - A traveler's check is a device intended to provide an instrument with the marketability of cash and the safety of a bank draft. This procedure makes it relatively easy to cash such an instrument where the owner-purchaser is not known to the cashing party and the purchaser is protected against loss of the instrument if it has not been countersigned.
- Bank money orders and personal money order -There are three parties to a money order: the remitter (payor), the payee, and the drawee. Another form of check now used and sold by banks, merchants, and others is the personal money order, or register check. Whereas bank money orders are often signed on behalf of the issuing bank, personal money orders generally have a resemblance to ordinary checks and are issued with unfilled blanks for the name of the payee, the date, and the signature of the purchaser. Only the amount is filled out at the time of issue and that is often done by check writer impression.
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