A check is a written order or request addressed to a bank or persons in the banking business and drawn upon them by a party having money in their hands, requesting them to pay on presentment to a person named on the check or to bearer, a fixed sum of money. In general, checks are uniformly payable to bearer. However, in the United States they sometimes they are payable to order. Checks are negotiable instruments, and are technically due before payment has been demanded, as distinguished from promissory notes and bills of exchange, which are payable on a particular day.
State laws vary, but under the law of some states, if a creditor accepts a check containing “payment in full” or similar language for a disputed debt, then the full amount of debt is generally discharged, even if the creditor strikes the language or adds language such as “accepted as partial payment only” or “accepted under protest.” Such laws treat the “payment in full” check as an offer of settlement, and the creditor’s cashing or depositing the check constitutes an acceptance of the debtor's settlement offer.
Typically, such laws require that there be a genuine dispute concerning the existence of the debt or the amount owed, and that the “payment in full” language must be conspicuous on the check itself or in a separate letter in bold-face type. Debtors may be able to still dispute the debt after depositing or cashing such a check if they return the full amount of the check to the debtor within a staturorily defined period. Local laws should be consulted for specific requirements in your area.
