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Home >> Checks/Money Orders >> Checks You Received
Is Bank Obligated to Honor On-us Checks?
Is it legal for a bank to refuse to cash checks for non-account holders, even though the check is drawn on that bank, using the excuse "the location is too small". Isn't it the obligation of the bank to honor all on-us checks?
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 It may be legal. If the bank has in its deposit agreement that checks presented in person may not be paid, and that the checks must go through the bank's regular check processing process, then it would not be wrongful dishonor.
You may have heard the term "wrongful dishonor". That can happen when the bank refuses to cash a check that was written by their customer and is valid for payment, but the Uniform Commercial Code also allows the parties that contract, that is the bank and its customer, to change the terms of any agreement and the standard requirements, so the bank and depositor can agree that all checks submitted for payment must go through the electronic clearing process, as an example.
A similar question arises when a bank charges a fee to a non-customer for cashing a check. The bank may deduct a fee from the face value of the check. Again, this may be done by agreement and courts have upheld the practice.
Banks have done both of these, because they find their lobbies so crowded with non-customers that their paying customers turn away because of the lines. The answer to your question, therefore, is that it depends on the agreement the bank has with the depositor, but it certainly may be done.
Published on BankingQuestions.com 3/09/10
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