In general, the bank bears the risk of loss if the check has become the bank’s property (check is handed over to the bank teller, inserted into the ATM or received by the bank in the mail.) Modernly, the loss of a check in transit generally presents little or no practical problem. In most instances, such a check will have been endorsed restrictively by the forwarding bank, and the depositor should have little difficulty obtaining a duplicate from the drawer. In addition, banks commonly reproduce checks handled for collection. Such a copy, if in existence, is commonly available for collection purposes.
Can my Bank Supply a Missing Endorsement on a Check if I Forget to do it?
A bank may be asked to collect a check that has not been endorsed by a payee. This may happen where the payee’s endorsement cannot be obtained because of his absence or for some other reason. If the payee is in fact a depositor of the bank, the check may be collected, notwithstanding the absence of the endorsement. In such instances, the depositary bank may indorse the check with a legend reading "Credited to the account of the named payee absence of endorsement guaranteed". It seems quite clear that a bank may safely pay a check bearing such a legend and that neither a collecting bank nor the payor bank will be liable on the unendorsed check if the intended payee actually receives the proceeds.
Are There any Warranties that a Bank or Person Writing a Check give?
Definite warranties are given by all parties involved in the collection process, including the depositor and each collecting bank, and they run in favor of each transferee collecting bank and the payor (person who wrote the check). The warranties to the payor or acceptor are:
- That the depositor or collecting bank has good title or is authorized to obtain payment on behalf of one who has good title
- That the depositor or bank has no knowledge that the signature of the maker or drawer is unauthorized
- That the instrument has not been materially altered
Should I Contact a Lawyer Regarding the Mishandling of my Check?
If you believe a bank, the person receiving a check, or the person writing the check has acted improperly regarding the handling of your check you should seriously consider hiring a financial attorney to investigate whether they have or haven’t, and sue for lost funds if they have.