We are not aware of any law or rule that would require a financial institution as a payor bank to issue a cashier’s check for the amount of the check that was originally returned for insufficient funds.

The Uniform Commercial Code (UCC) states that a bank may only charge a customer’s account for items that are “properly payable.” 810 ILCS 4-401(a). Under the UCC, a check is “properly payable” if presented “in accordance with any agreement between the customer and the bank.” 810 ILCS 4-401. The UCC states that a payor bank (a bank that is the drawee of a draft) may charge an account to create an overdraft, but it is also free to dishonor an item that is not properly payable. 810 ILCS 5/4-402(a). At the time the check was initially presented for payment, it was not properly payable, because the customer had insufficient funds (provided that the bank’s account agreement with its customer did not require the bank to cover a check in that amount when the account had insufficient funds).

Additionally, the payor bank can make the decision to dishonor for insufficiency of funds at “any time between the time the item is received … and the time that the payor bank returns the item or gives notice in lieu of return, and no more than one determination need be made.” 810 ILCS 5/4-402(c). Therefore, the dishonorment of the check remains appropriate, notwithstanding the fact that new credits might have been made to the account after the payor bank evaluated the sufficiency of the funds in the account.

Provided that the bank’s account agreement with its customer did not require the bank to cover a check in that amount when the account had insufficient funds, the bank did not improperly dishonor the check when it refused to pay it, and it is not obligated to issue a cashier’s check for the funds.