Negotiable Instruments Article Review

ARTICLE REVIEW

UNIVERSITY OF PHOENIX

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 http://www.lordbissell.com/Newsstand/Check21-Anthony.pdf

ARTICLE SYNOPSIS

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.

LEGAL ISSUE

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.

MANAGERIAL PERSPECTIVE

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.