The postdated check
In many transactions, especially in commercial transactions, it has prevailed to use the post-dated check as a means of credit. The credit, which is agreed between the lender and the debtor for a certain period of time, is nowadays almost always accompanied by the issuance by the debtor of a check, which "expires" at the corresponding point in time, at which the credit also expires. However, a careful study of the Securities Law shows us that the act of issuing a post-dated check hides many risks, both for the issuer-debtor and for the bearer-lender, in the case of course when a bad-faith trader is on the other side.
As predicted, the check today is mainly used as a means of credit. But what is the regulation of the Law on this specific issue? According to the Securities Law, therefore, the instrument of credit is mainly the bill of exchange. On the contrary, the check is and must be used as a means of immediate payment and not as a means of providing credit. According to the true meaning of the Law, therefore, whoever gives a bill of exchange needs money, while, on the contrary, whoever gives a check has money. This exact position of our legal provisions is easily perceived even by the simple visual observation of the two above-mentioned securities, i.e. a bill of exchange and a cheque. So we notice by simply looking at these two securities, that the bill of exchange has, as elements that must be completed, in order to be valid, both an issue date and an expiration date. On the contrary, the check does not have an expiry date, but only an issue date, because quite simply, the check does not "expire" but is always payable upon its appearance at the bank. It is precisely because of this that we speak of a postdated check, because there is simply no expiration date, so the only way to ensure the credit is to postdate it, that is, even if we issue it today, for example, to write on the body of the note that we published it for example after two months.
It has already been realized that the issue of post-dated cheques, though prevalent in transactions, is nevertheless a circumvention of the Law. Then we will examine two basic parameters of the whole issue, namely the cause of the phenomenon and the risks faced by both the issuer and the bearer of a postdated check. With reference to the cause of the phenomenon, it lies solely in the fact that issuing a bad check is a criminal offence. The non-payment of a bill of exchange can create a multitude of civil claims, but it is very difficult to support the criminal conviction of the insolvent debtor, because our Law simply does not provide for the criminal hell of non-payment of the bill of exchange. On the contrary, the issuer of a bad check runs the risk of being brought before the criminal Court and suffering a criminal conviction, as the Law expressly provides for such a criminal conviction. From the above it is therefore concluded that the check is equipped by the Law with more advantages for the creditor in case of non-payment and precisely because of this it gradually prevailed to be used as a means of providing credit, compared to the bill of exchange. And this is of course perfectly natural, because the creditor prefers to have a check from his debtor in his hands and exerts pressure for this, as he knows that the debtor will think twice about not covering the check, due to the risk of being sent to prison .
Of course, the natural progression of each check is its payment and the natural course of the post-dated check is its collection - payment at the point in time, which is referred to as the date of issue, in accordance with the foregoing. This happens, of course, when we are talking about good faith behavior and when the participants in the check relationship intend to keep what was agreed, that is, that the check will not be collected until the "date of issue" and that it will not be revoked until the "date of issue". But what happens when either the lender or the debtor intends to act in bad faith, and how is this very issue dealt with by the web of our legal provisions? According to Securities Law, a check is always payable at sight, i.e. from the moment it is issued, it can appear at the bank and be collected immediately, and in case of lack of available funds in the account of the issuer - lender, it can be "stamped". In fact, the same is also provided for post-dated cheques, i.e. checks that falsely bear a later date than the actual issue date, which can also be presented immediately for payment even before the listed issue date. The danger is already visible and is fully understood with the following example. Let's say that the debtor issued a transfer today
post-dated check with an issue date after one month, calculating that in one month it will have covered the amount. The bearer of the check is not bound by the indicated date of issuance and can even present the check to the bank the next day and, in the event of non-availability of the funds, request the bank to stamp it. Of course, the bearer can be in good faith and not do this, waiting for the date written on the body of the check to arrive. But the same bona fide creditor may also owe money himself and instead of cash endorse the check to his own creditor, who may act in bad faith and present the check immediately. As can be seen, the circle of persons, who can mediate until the arrival of the indicated date, can certainly grow dangerously for the issuer and original debtor of the check.
Another case, which hides risks, is the so-called revocation of the check. Revoking is the action which the issuer of the check is legally entitled to take, if the check is not presented by the bearer within eight days of its issue, and this revocation leads to the non-payment of the check by the bank without consequences for the publisher. Unfortunately, it has been observed that banks sometimes accept the withdrawal orders and do not pay the checks even if the withdrawals are made before the eight-day period from the false date of issue, but in any case after the eight-day period from the actual issue. Thus, in the previous example, if the bearer of the postdated check is in good faith and waits for the date on which it is written to present the check for payment, but the issuer is in bad faith and revokes the check after eight days have passed from the actual date of issue, then the revocation, if accepted by the bank, will result in non-payment of the cheque, with the result that the bearer will now have to pursue his claim in Court.
From the above it is clear that in any case the issuance of post-dated checks is the least risky. Even if there is absolute trust between the issuer and the bearer of the check, the circle of persons participating in the check can grow, in view of the possibility of transferring the check by endorsement. Of course, credit, as a concept and a function, is essential nowadays in many aspects of life and especially in trade. So in any case it is wiser to use, as a means of credit, the bill of exchange established for this purpose, to avoid bad faith behaviors, which can only be harmful.
Alexandros G. Tsapelis, Lawyer