Quasi-Checks: An Apology for a Mutation of Negotiable Instruments

DePaul Journal of Business and Commercial Law, Vol. 5, pp. 579-603, 2007

30 Pages Posted: 11 Jun 2008 Last revised: 15 Apr 2009

See all articles by Jonathan Yovel

Jonathan Yovel

NYU School of Law - Straus Institute for the Advanced Study of Law and Justice; University of Haifa - Faculty of Law; Yale Law School


This essay deals with one of the persistent problems in the law of negotiable instruments, namely the practice-originated legal phenomenon of so called quasi-instruments (it focuses on quasi-checks and deals also with quasi-notes.) First, it supplies a formal definition for quasi-instruments. It then proceeds to analyze the real-world interests, concerns and risks associated with quasi-checks, dealing respectively with those risks that are germane to banks, payers, payees, and subsequent holders. It proceeds on three levels: analytic introduction of the phenomenon, including the UCC Article 3 extension rule that accords fully negotiable status to some quasi-instruments, but no to others; normative and relational analysis pre- and post-revision extension rule; and finally, a certain critique of the prevalent justification to the validation of quasi-instruments (mainly, streamlining banking practices and technology) and forwarding an alternative, relational justification (based on the reliance interests of payees and subsequent holders). The alternative justification calls for a more inclusive approach to quasi-instruments, in one sense favoring the extension rule of pre-revision UCC Article 3 over that of the post-revision (however, the post-revision policy is justified inasmuch as granting holder in due course status quasi-holders is concerned). The essay also makes the claim -made nowhere previously, as far as research could establish - that the post-revision extension rule of UCC Art. 3 contains a serious technical flaw. The fact that practice and application are by and large indifferent to this flaw is not so much a failure of scholarship or the judiciary, but instead indicates that once a satisfactory theoretical solution to the question of quasi-instruments is generally reached, technical failings in the relevant statute (here, UCC ยง3-104(c)) are relatively inconsequential. Other issues covered are the influence of Check 21 on quasi-instruments, the question of depository banks as holders in due course, and other matters. This essay then combines positive and normative analyzes of negotiable instruments law with jurisprudential generalizations that follow from these layers of analysis.

Keywords: Banks, Uniform Commercial Code, negotiable instruments, Check 21, legal formalism

JEL Classification: K12, K00, K10, K19, K33, K49, K11

Suggested Citation

Yovel, Jonathan, Quasi-Checks: An Apology for a Mutation of Negotiable Instruments. Available at SSRN: https://ssrn.com/abstract=1032410

Jonathan Yovel (Contact Author)

NYU School of Law - Straus Institute for the Advanced Study of Law and Justice ( email )

New York
United States

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 31905

Yale Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States
203.435.5911 (Phone)

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