Post Dated Cheques

emma1983_2

Hi, anyone out there know the law or the terms on post dated cheques?

The reason why I ask is that I owe money to a company and I have asked if I can pay in monthly instalment to which they agreed but they said they want me to send a number of post dated cheques. Now, this doesn't seem common practice to me as I've always setted up direct debits or sent cheques one by one each month and surely my bank could accept the cheques if given to them too soon. It just seems dodgy but I would like to respond to the company with factual information as to why I am not going to hand over post dated cheques.

Your help is very much appreciated!

KimYeovil

Yes, it is dodgy. As you know, the company can choose to tender the cheques whenever they please (and in the current market a sudden desire for liquidity is not improbable) and they are likely to be honoured regardless of date.

YorkshireBoy

Tell the company you'll be breaching the T&C's of your current account if you issue post-dated cheques, therefore you won't be doing it!

lolarentt

What sort of company are we talking about here? It's still used a lot in business where a debtor can't pay what's due and it's usually the debtor who asks if he can use pd cheques then. As a creditor one is inclined to be more lenient if one has the prospect of the account being made up to date in 3 months, rather than not at all, and is thus less likely to turn to legal proceedings to recover the debt.

He's unlikely to pay them in early if he knows the money wont be there to meet them, this wouldn't get him anywhere!

emma1983_2

Its actually a solicitor acting on behalf of an estate agent which surprises me as they should know the t&cs. Well I'm going to tell them what's what and get a direct debit set up. Thanks for the advice!

lolarentt

There's certainly nothing illegal about them - it's just a piece of paper with a promise from you to pay someone a certain amount on a future date. I would expect a solicitor to be happy to accept them - well prepared to accept them I should say rather than happy!

emma1983_2

Yeah the thing that worries me is that if I did issue post dated cheques and the bank accepted them in advance of the cheque dates then I would incur a bank charge as the cheques would bounce and I don't trust the solicitors to stick to their part of the deal.

Mikeyorks

There is no 'law' on PD cheques. They don't come under the Cheques Act and derivatives .. because they're promissory notes, until in date.

Solicitors are notorious for loving paper and files. Hence they find it easier to have, in this case, a 'resolved' case by having pieces of paper to feed in on the due dates. Until fairly recently the Debt Management offices of HMRC used to ask for PD cheques when negotiating instalment arrangements.

lolarentt

As I said they're not likely to deposit them early as they would know the money wont be available. Being solicitors they'll no doubt be filed under some ancient abeyance system that will bring them to light in time to pay in on the required date. If I were you I would be quite happy with this under the circumstances, as long as you remember you've issued them when doing your accounts!

alibalibee2

If you do issue a post dated cheque and it is presented early you have no come back if the bank honour it. I would definately not write post dated cheques.

Lansdowne

Surely if you have the suggestion in writing from the solicitor, then if they bank the cheques early they (the solicitor not the bank) are breaching their contract with you.