Common use of Substitute Check Clause in Contracts

Substitute Check. To make check processing faster, federal law permits banks to replace original checks with "substitute checks." These checks are similar in size to original checks with a slightly reduced image of the front and back of the original check. The front of a substitute check states: "This is a legal copy of your check. You can use it the same way you would use the original check." You may use a substitute check as proof of payment just like the original check. Some or all of the checks that you receive back from us may be substitute checks. This notice describes rights you have when you receive substitute checks from us. The rights in this notice do not apply to original checks or to electronic debits to your Account. However, you have rights under other law with respect to those transactions. So you will recognize substitute checks when you receive them, we have included an image of a sample substitute check. The numbers listed below the image correspond with the numbers on or near the substitute check image and the corresponding text explains the various components of a substitute check. These numbers correspond with the numbers on the Substitute Check Image: • An image of the original check appears in the upper right-hand corner of the substitute check. • A substitute check is the same size as a standard business check. • The information in asterisks relates to the “reconverting bank”—the financial institution that created the substitute check. • The information in brackets (appears sideways facing check image) relates to the “truncating bank”— the financial institution that took the original check out of the check processing system. • The Legal Legend states: This is a LEGAL COPY of your check. You can use it the same way you would use the original check. • The MICR lines at the bottom of the image of the original and at the bottom of the substitute check are the same except for the “4” at the beginning of the MICR line on the substitute check, which indicates that it is a substitute check being moved forward for collection purposes. It is also possible for the MICR line on the substitute check to begin with a “5” if the item is being returned. The rest of the MICR line is the same as the original check to ensure that it is processed as though it were the original.