Are Checks Negotiable Instruments in Michigan?

The term negotiable instrument is used often in financial conversation. The state of Michigan's Uniform Commercial Code dictates what can be called a negotiable instrument and how it is handled in court disputes. Checks are included in the code's Article Three.

Definition

Michigan Legal Code defines a negotiable instrument as "a promise of order to pay a fixed amount" that must be paid on demand or at a specific time. A negotiable instrument does not have interest or fees that the receiver must pay.

Types

Checks are not just the personalized slips of paper in your checkbook. They are any draft that must be paid when the bearer demands it and drawn by a banking institution. These instruments document the bearer, payer, amount or value of that particular instrument and the date on which it can be redeemed. Money orders are thus considered checks.

Significance

Because checks are negotiable instruments, they are often used to document transaction or contract fulfillment. Adding the account number, payment purpose or "final payment" on a check makes it a binding document that can be presented in court.

References

• Michigan State Legislature: Uniform Commercial Code
• Michigan Department of State: UCC Overview
• Michigan Supreme Court: Opinion