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To issue cheques, bank customers must previously sign a contract with the bank to use this payment instrument.
Banks are not required to provide their customers with cheque books.
In Portugal, the cheques provided by banks to their customers are standardised – they are identical in terms of presentation, format and mandatory text – which enables their automatic processing by the institutions and facilitates their correct completion by issuers.
When cheques enter the banking circuit, they can be paid or returned.
As a rule, banks may charge fees and expenses to the person who issues the cheque (the drawer) and to the person who receives the cheque (the payee), related to the provision of services associated with the use of cheques.
These charges must be set forth in the price list, which must be available for consultation by customers in all branches and places of public service.
The cheque book can have a pre-printed expiry date. This expiry date increases the security of cheque transactions.
The use of cheques after the pre-printed expiry date has expired is not prohibited, but it is not recommended.
The payee must not accept a cheque after the pre-printed expiry date on the cheque has expired, since the bank drawn may refuse payment on the grounds "cheque submitted after the expiry date”. For the same reasons, the issuer should also not issue a cheque whose expiry date has been exceeded.
When issuing/accepting a cheque with a pre-printed expiry date, customers must ensure that the date of issue is prior to the expiry date.
A cheque can be endorsed by its payee.
By endorsing a cheque, payees transfer all of their rights as payee of the cheque to the person to whom they endorse the cheque.
The endorsement may consist only of the signature of the payee on the back of the cheque.
To ensure that they are paid only to the payee indicated therein, cheques must be issued ‘not to order’. Cheques issued ‘not to order’ cannot be endorsed.
If the cheque books are ‘to order’, the issuer may cross out this expression and write ‘not to order’ after the name of the payee or in the space above the crossed-out expression. The issuer thus guarantees that the cheque is paid only to the original payee, making it impossible to subsequently endorse it.
Pre-printed ‘not to order’ cheques cannot be converted to ‘to order’ cheques.
Cheque issuers may revoke a cheque (i.e. order the bank not to pay it) before the legal time limit (as a rule, eight days) for good reason (e.g. larceny, theft or loss). In these situations, the issuer should go to their bank and order the check not to be paid. The bank should therefore return the cheque to the clearing.
The bank must keep the document in which its customer states the reason why the cheque should not be paid.
It is up to the bank to assess whether the reason given is suitable. However, it is not for the bank to ascertain the veracity of the reason given.
If the reason stated by the issuer of the cheque is not true, the payee of the cheque may take legal action against the issuer and it may even involve the crime of issuing a cheque without provision.
Cheque issuers can also order their bank not to pay the cheque if it is presented for payment after the legal time limit (as a rule, eight days). In this case, the issuer need not indicate the existence of grounds for revocation of the cheque. Also in these cases, the bank must return the cheque to the clearing.
Cheques are returned when the payer’s bank (on which the cheque is issued) rejects its payment, invoking the following reasons:
Presentation after the deadline – when the bank refuses to pay a cheque submitted for payment after the legally defined time limit (as a rule, eight days) or in relation to which the time limit for the use of the respective cheque book has not been observed;
Faulty check – when the cheque items, namely the signature, amount, date of issue or payee are vitiated;
Blocked account – when the balance of the account is unavailable by decision of judicial authority;
Closed account – when the deposit agreement was extinguished at the initiative of the customer or the bank;
Suspended account – when one of the collective account holders has died and until the asset has been shared;
Irregular endorsement – when the endorsement has been done incorrectly;
Lack of primary requirement – when there is no indication of a certain amount, signature of the issuer or date of issue;
Lack or insufficiency of provision – when the balance of the deposit account is zero or insufficient to allow payment of the cheque by the bank;
Unclearable – when the cheque contains erasures or overwriting on any of the pre-printed mentions on the physical media, unless they are due to the issuance of a ‘not to order’ cheque; contains erasures or overwriting in the pre-printed mention ‘not to order’; was previously returned three times by the drawee, for lack or insufficiency of provision; was subject to an attachment, regardless of the reasons that gave rise to it;
Account and/or cheque number does not exist – when the account number does not exist or, should it exist, the cheque number on the computer record does not correspond to the cheque records in the payer's bank;
Irregular withdrawal – when there is mismatch of the issuer’s signature, the signature of a holder that does not appear on the account opening form, insufficient signatures or an unauthorised signature to draw a certain cheque;
Revocation – when the issuer has instructed its bank not to pay the cheque for having been subject to larceny, theft, loss, moral coercion, accidental incapacity or any situation where there is defective or lack of willingness (revocation for just cause). It may also be used when the issuer has given concrete instructions to its bank for the cheque not be paid at least after the legally set time limit, or another time limit indicated by it (revocation due to late submission).
Both the drawer or payee of a returned cheque should go to their bank to clarify how to proceed.
In cases where the cheque is returned, as a rule, banks can only charge fees and expenses to the drawer (the person who issues the cheque).
In cases where banks can charge fees related to the provision of services associated with the use of cheques, these must be provided for in the price list, which must be made available for consultation by customers in all branches and places of public service. The value of these fees is not fixed by law.
Cheque clearing, through the Portuguese Interbank Clearing System managed by Banco de Portugal, makes it possible for a bank cheque to be cashed through another bank. All the payee needs to do is to deposit it in his or her account.
Only cheques using the standardized model drawn against national banks may be presented for clearing. However, cheques in the following situations may not be presented for clearing:
Regardless of the expiry date of the cheque book/form, the cheque must be submitted for payment within the legally established time limit. As a rule, this limit is eight days from the date contained on it as the date of issue.
Cheques presented for payment after the legal limit has expired may be returned by credit institutions for the following reasons: ‘revoked cheque – cheque submitted after expiry date’ (by indication of the issuer) or ‘cheque submitted after expiry date’ (upon decision of the credit institution).
The time limits for making funds available through cheques are, as a rule, the following:
If a cheque is certified or drawn on an account of the same institution where the deposit is being made, the funds are made available on the same day as the deposit;
If a cheque is from a different bank, the funds are made available on the second business day after the date of the deposit;
If a cheque is deposited via the ATM, the funds are made available on the second business day after the date of the deposit, after the credit institution has checked and certified the cheque. This should take place in the shortest time possible, no more than 24 hours from the moment the cheque is deposited, except in the event of exceptional situations or force majeure.
In this context, a business day shall be understood to mean the period of the day in which the credit institution is open to the public at normal business hours, i.e. from Monday to Friday, between 08.30 a.m. and 3 p.m., with the exception of national holidays and bank holidays (provided for in the sector's Collective Bargaining Agreement). The bank holidays that do not coincide with national holidays are Carnival Tuesday and 24 December.
Banco de Portugal’s website – Cheques
Banco de Portugal’s website – SICOI (Portuguese Interbank Clearing System)
Decree-Law No. 18/2007 (only in Portuguese)
Decree No. 454/91 (only in Portuguese)
Notice No. 3/2007(only in Portuguese)
Instruction No. 8/2018 (only in Portuguese)
Cheques – What they are
Cheques – Precautions when using cheques