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What is a Post Dated Cheque? A post dated cheque, as the name indicates is a cheque in which a future date is entered. This means that the cheque cannot be cashed until that day. Such cheques are perfectly legal unless they interfere with a contract or an agreement. A few countries allow such cheques to be cashed prematurely under certain circumstances. However this is not allowed in Canada. Generally such cheques are used to give out payday loans. These loans are small amounts that are given to someone till their pay day. Once the borrower gets his or her pay cheque, the loan is expected to be returned.

In Canada, cheques are payable on demand. This means that you can make a post dated cheque and deposit it in a bank. Once the payee gets the cheque, itís a legal tender and it is within the rights of the payee to cash in the cheque whenever he or she pleases it. This could go unnoticed and the money could be credited to your account. Such an action by a bank will not have any legal consequences. The banks cannot be sued or held responsible for such actions. However if the bank does notice the date, then there is a very good chance that they would simply refuse to credit it to you until the due date as specified on the cheque.

Most people tend to make out post dated cheque because they do not have enough money in their account at the time the cheque is made out. For instance people give out cheques to be issued on the day they get their paycheques. Therefore although it is possible to cash in a cheque before the due date, there is a good chance that it will bounce in which case it is not good for the payee. Also the payer might be charged a fine in which case he or she might not be happy.

Because of the huge number of cheques banks process everyday and the widespread use of automated systems some post dated cheques may end up in bank counters before their due date. However banks in most countries including Canada have the right to return a post dated cheque right up to the day before the date specified in it. If in case such a cheque is processed before its time and there are problems of overdrafts, the customer should take up this issue with the bank and have it solved immediately.

Sometimes dealing with post dated cheques can prove to be a problem for the payee. This is because these cheques cannot be cashed before their time giving the other person a chance of closing down their account. The payee cannot demand for a payment under such circumstances as the bank action in this situation is not criminal. A post dated cheque cannot be simply treated as an admission of debt or as an agreement to pay the other party. The payee can end up loosing cash this way.

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