Legal Question in Business Law in Virginia
Modern Test of Payment
If I have a check that I indorse on the back stating "Pay to the order of Mr. John Doe but I will not be responsible if the check is not paid. Signed: My Name", does this meet the modern test of payment? Is this a qualified indorsement? Thanks.
1 Answer from Attorneys
Re: Modern Test of Payment
I don't know what you mean by "the modern test of payment." The person to whom you tender such a check is not obligated to accept it unless he has a contractual duty to do so.
The indorsement to which you refer is not a "qualified indorsement," which is not a defined term. It is a non-recourse indorsement, although it would be clearer simply to say "pay to the order of John Doe, without recourse." The effect of this indorsement is to transfer title to the instrument while disclaiming any liability for it. It is generally not acceptable in commerce to indorse checks this way unless special circumstances exist.
Daniel Press
Chung & Press, P.C.
6723 Whittier Ave., Suite 302
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