IRREVOCABILITY OF BANK DRAFTS, CERTIFIED CHEQUES AND MONEY ORDERS

Abstract

This article deals with three types of negotiable instruments payable on demand which are issued, stamped or signed by banks prior to their collection and payment, and used as mechanisms for the transmission of funds. These instruments are the bank draft, including the bank money order, the certified cheque, and the personal money order. The article is concerned with the binding effect, or the irrevocability, of the bank's obligation on these instruments under the law of bills and notes. It concludes that (1) the issuer of the bank draft is liable as a drawer, and under some circumstances, also as a maker or acceptor, that (2) cheque certification amounts to the acceptance of the cheque, and that (3) imprinting the amount on a personal money order ought to be treated like cheque certification. As to all three species, the bank's obligation is thus irrevocable.