To deter money orders and certified checks from being abandoned, may we print “VOID AFTER 120 DAYS” on them? We want to encourage payees to cash them as soon as possible.

We do not recommend placing expiration dates on money orders and certified checks.

As to certified checks, the Illinois Uniform Commercial Code (UCC) requires banks to honor certified checks they have issued and subjects them to potential liability for wrongful dishonor. While a bank generally is not obligated to pay a check presented six months or more after its date, that rule expressly does not apply to certified checks, which “are the primary obligation of the certifying bank (Sections 3-411 and 3-413), which obligation runs direct to the holder of the check. The customer’s account was charged when the check was certified.” As your bank is obligated under the Illinois UCC to pay certified checks that are presented even six months after they have been issued, we do not recommend placing expiration dates on certified checks.

The UCC requirements for certified checks do not necessarily apply to money orders, which Illinois courts have held are more in the nature of ordinary checks. However, we do not recommend placing expiration dates on money orders either. While the UCC does not prohibit a check issuer from placing an expiration date on a check — and many issuers do print “void after 90 (or 180) days” on various types of checks — your restrictive language would not cause a money order to expire and be void. Rather, a money order presented after the putative expiration date would be treated as a “stale” check (as opposed to a “void” check), according to at least one Illinois court. This approach benefits your bank, which most likely reserves the right to cash stale checks (and should, if it doesn’t), because otherwise it would be exposed to ongoing liability when processing and honoring stale checks in the ordinary course of business, which is not an uncommon occurrence.

For resources related to our guidance, please see:

Illinois UCC, 810 ILCS 5/4-404 (“A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than 6 months after its date, but it may charge its customer’s account for a payment made thereafter in good faith.”)

Illinois UCC Comment 1, § 4-404 (“Certified checks are excluded from the section because they are the primary obligation of the certifying bank (Sections 3-411 and 3-413), which obligation runs direct to the holder of the check. The customer’s account was charged when the check was certified.”)

Illinois UCC, 810 ILCS 5/3-409(d) (“‘Certified check’ means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in subsection (a) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.”)

Illinois UCC, 810 ILCS 5/3-413(a) (“The acceptor of a draft is obliged to pay the draft (i) according to its terms at the time it was accepted, even though the acceptance states that the draft is payable ‘as originally drawn’ or equivalent terms, (ii) if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or (iii) if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in Sections 3-115 and 3-407. The obligation is owed to a person entitled to enforce the draft or to the drawer or an indorser who paid the draft under Section 3-414 or 3-415.”)

Illinois UCC, 810 ILCS 5/3-411(b) (“If the obligated bank wrongfully (i) refuses to pay a cashier’s check or certified check, (ii) stops payment of a teller’s check, or (iii) refuses to pay a dishonored teller’s check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.”)

Center Video Indus. Co. v. Roadway Package Sys., 90 F.3d 185, 189 (7th Cir. 1996) (“Money orders differ from cashier’s checks and certified checks in that the latter contain the signature of a bank official, while money orders do not. Because the UCC provides that no one is liable for an instrument unless his signature appears on it, some states have held that money orders are not primary obligations of the bank.”)

Chicago Cicero Currency Exchange, Inc. v. Continental Illinois Nat’l Bank & Trust Co., 189 Ill.App.3d 259, 261 (1st Dist. 1989) (“Since a personal money order is not signed by an authorized representative of the issuing bank, it is more in the nature of an ordinary check than a bank obligation, and, thus, subject to stop-payment orders.”)

Aliaga Medical Center, S.C. v. Harris Bank N.A., 387 Ill.Dec. 32, 39 (1st Dist. 2014) (“Furthermore, under the parties’ agreement, Harris Bank specifically ‘reserve[d] the right to pay * * * a stale check.’ [The plaintiff’s] contention that this provision is inapplicable because the check ‘was not * * * stale * * * [but instead] it was void’ is without merit. . . . [The plaintiff] has not cited to any case nor identified any other authority supporting its proposition that there is a substantive difference between stale checks and those marked void after a certain time.”)