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and cleared. There is a caveat in that the bank protocols may declare the draft too old to be valid; this has been known to happen when the draft is over six years old. Like other types of cheques, a draft must still be cleared and so it will take several days for the funds to become available in the payee's account.
160:) provided to a customer of a bank or acquired from a bank for remittance purposes, that is drawn by the bank, and drawn on another bank or payable through or at a bank. In Canada, the term "bank draft" includes both this kind of check and, in practice almost always, the instrument known elsewhere as a
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However, it is impossible to predict when the cheque will be deposited after it is drawn. Because the funds represented by a cheque are not transferred until the cheque is deposited and cleared, it is possible the drawer's account may not have sufficient funds to honour the cheque when the transfer
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law and the bank's issuing policies.) Because the funds of a banker's draft have already been debited they are proven to be available. This means that the amount will honoured unless the draft is a forgery or stolen, or the bank issuing the draft goes out of business before the draft is deposited
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A normal cheque represents an instruction to transfer a sum of money from the drawer's account to the payee's account. When the payee deposits the cheque into their account, the cheque is verified as genuine (or 'cleared', a process typically taking several days) and the transfer is performed
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By contrast, when an individual requests a banker's draft the amount of the draft (plus any applicable fees and charges) is immediately removed from their account. (An individual without an account at the issuing bank may request a banker's draft and pay for it in cash, subject to applicable
196:, except in Canada where the term "bank draft" covers both meanings. A cashier's check is a check that is drawn directly on the bank issuing it, signed by an officer or employee of the bank on behalf of the bank as drawer, and a direct obligation of that bank.
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finally occurs. This dishonoured or 'bounced' cheque is now worthless and the payee receives no money, which is why cheques are less secure than cash.
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239:"Irrevocability of Bank Drafts, Certified Cheques and Money Orders, 1986 65-1 Canadian Bar Review 107, 1986"
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or similar system). Any individual or company's operating a
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285:12 C.F.R. § 229.2(i).
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