Joint Check Agreement Law and Legal Definition

A joint check agreement is an agreement between two parties, allowing one to pay a balance due by writing a check issued to two or more payees. It is often used in the context of construction, and a supplier may require the agreement between a general contractor and subcontractor before extending credit to the subcontractor. A joint-check agreement allows a general contractor to make payments due under a subcontract to both the subcontractor and a third party. The third party is usually providing services or materials covered under the subcontractor's scope of work. Usually, this agreement will be made between a general contractor, subcontractor, and supplier, who agree that the general contractor will issue checks for progress payments or final payment that are payable jointly to the subcontractor and the supplier. A joint-check agreement may also be between the owner, general contractor, and a subcontractor. In such a case, the owner would issue checks jointly to the general contractor and the subcontractor. If a payee on a joint check wrongfully endorses and cashes a joint check, the issuer of the check may still be liable to pay the party that did not receive any of the proceeds of the check.

For example, a general contractor may have a joint check agreement with a subcontractor. However, the general contractor may later assert back charges against the sub or claim that the subcontractor never completed its contract. If the general contractor is not obligated to pay the sub, the general contractor is also not obligated to write a check and the joint check agreement will not be enforced.