Are there laws on when a restrictive condition on a check is legally effective?

Question

An answer by Benjamin Chambers to a question on our sister site Personal Finance and Money (Adding a 180 day expiration to checks), mentions that "While you can print that [180-day expiration] on the check, it isn't considered legally binding."

Is there actually a law or US banking regulation on when a restrictive condition on a check is legally effective? I do know that both the US Federal Government and many state and local governments print expiration dates on their checks, but it is unclear whether these conditions are legally effective just by virtue of being printed on the checks or whether these governmental entities have arranged special deals with the banks their checks are drawn on to deny payment after the stated expiration date (and so ordinary people putting similar restrictions on their checks has no effect because their banks never agreed to honor them). I have also seen paychecks from private companies with similar restrictive conditions printed on them.

In other words, are conditions of payment or validity written on checks considered contract clauses in law, i.e. they can impose any conditions other than those that would be illegal in a contract (e.g. illegal purpose, purpose against public policy, unconscionable, etc.), or are such restrictions non-contractual in nature and solely creatures of banking policy?

If restrictive conditions are legally valid on checks, are there restrictions on what kind of condition can be placed? Some hypotheticals might be:

• "Void after 180 days"
• "Void after 90 days"
• "Void after 2 hours"
• "Void after Biden leaves office"
• "Void if payee has been convicted of a felony"
• "Void if deposited into an account of a bank incorporated in Arkansas, Texas, or Oklahoma"
• "Void if payee weighs more than 300 pounds" (use this condition to encourage your friends and family to lose weight so they can cash your gift checks)
• "Void unless the presenter is topless" (could be used to humiliate someone you owe money to)
• "Void unless the payee is wearing polka-dotted pants at time of presentation for payment"
• "Void except during the full moon"
• "Void except within 10 days of Christmas"

Answer 1

us

Is there actually a law or US banking regulation on when a restrictive condition on a check is legally effective?

On the contrary, it is explicitly ineffective. See UCC 3-206:

(a) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.

(b) An indorsement stating a condition to the right of the indorsee to receive payment does not affect the right of the indorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.

According to this, all States except New York and South Carolina adopted the 1990 version of UCC Part 3. New York has a version that's worded differently but essentially has the same meaning. Same with South Carolina.

In the US, the UCC Part 4 allows banks to not honor "stale" checks (usually 180+ days past the date on the check). But that doesn't void the check - the obligation is still valid.

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 six months after its date, but it may charge its customer's account for a payment made thereafter in good faith.

Part 4 has similar acceptance as Part 3 when it comes to incorporating the UCC into state laws.

uk and many other places:

In the UK, and many other places in the world, there are in fact ways to restrict the negotiability of a check.

Cross - two parallel lines on the check. This means that the check must be deposited, and cannot be cashed.

Payee only - Adding the "payee only", "not negotiable", or removing "to the order of" from the check limit the ability of the payee to endorse the check to someone else.

Each (and many times both) can be preprinted on the blank checks, added by whoever wrote the check, or by whoever received the check.

See here.

Answer 2

I discuss the legality of "not to exceed" restrictions in this answer.

In theory, "not to exceed" memos and the like can be legally effective by relying on UCC § 3-407. Basically, if someone is given a blank check with a "not to exceed" memo and is told to respect that NTE line, then ignoring the NTE line would constitute "an unauthorized addition of words or numbers" to the check. Prior to filling in the check, it would be an "incomplete instrument." Hence, the NTE line represents a restrictive condition that is legally effective.

In practice, relying on this is a bad idea, since banks are under no obligation to pay any attention to the "memo" field on a check. Thus, recipients of such checks may find it rather easy to (illegally) cash such checks with a value exceeding the NTE memo.