The Risks and Benefits of Blank Cheques
A blank cheque is a cheque that has no monetary value written in, but is already signed by the issuer. It can be used in different situations, such as giving someone unlimited authority to act on one’s behalf, or making a payment without knowing the exact amount in advance. However, a blank cheque also comes with high risks, as it can be easily misused or stolen by anyone who gets hold of it.
In this article, we will explore the meaning, validity, and uses of blank cheques, as well as the potential dangers and precautions that one should take when dealing with them.
What is a Blank Cheque?
A blank cheque is a cheque that has no monetary value written in, but is already signed by the issuer. It is also known as an incomplete instrument, as it does not contain all the essential elements of a valid cheque, such as the date, the payee’s name, and the amount.
A blank cheque can be used for various purposes, such as:
- Giving someone carte blanche to act on one’s behalf, such as a lawyer, an agent, or a friend. For example, a person who is travelling abroad may give a blank cheque to their lawyer to handle any legal matters that may arise in their absence.
- Making a payment without knowing the exact amount in advance, such as a tip, a donation, or a fee. For example, a person who is dining at a restaurant may leave a blank cheque for the waiter to fill in the amount of the bill plus the tip.
- Creating a customised cheque with one’s own logo and details. For example, a business owner may order blank cheques from a cheque printing company and then add their company name, logo, and account number on them.
What is the Validity of a Blank Cheque?
A blank cheque is valid as long as it is signed by the issuer and has sufficient funds in the account. However, it is not advisable to issue or accept a blank cheque, as it can lead to legal disputes and frauds.
Some of the issues that may arise with a blank cheque are:
- The payee may fill in an amount that is higher than what was agreed upon or expected by the issuer. For example, if a person gives a blank cheque to their friend to buy groceries for them, the friend may fill in an amount that is much more than the actual cost of the groceries.
- The cheque may get lost or stolen by someone who may fill in any amount and cash it at any bank. For example, if a person leaves a blank cheque in their car and their car gets broken into, the thief may fill in any amount and present it to any bank for payment.
- The issuer may forget to fill in the date or write an incorrect date on the cheque. For example, if a person writes a blank cheque and dates it in the past, it is called an anti-dated cheque. An anti-dated cheque can be rejected by the bank or cause confusion for the payee.
How to Give or Receive a Blank Cheque Safely?
Given the risks involved with blank cheques, it is better to avoid them altogether and use other methods of payment that are more secure and transparent. However, if one has to give or receive a blank cheque for some reason, they should take some precautions to minimise the chances of fraud or dispute.
Some of the precautions that one should take are:
- Only give or receive a blank cheque from someone who is trustworthy and reliable. For example, if one has to give a blank cheque to their lawyer or agent, they should make sure that they have a good reputation and track record.
- Write down the purpose and amount of the payment on the back of the cheque or on a separate document. For example, if one has to give a blank cheque to their friend for buying groceries for them, they should write down “for groceries” and an estimated amount on the back of the cheque or on a note.
- Fill in as much information as possible on the front of the cheque, such as the date, the payee’s name, and “