Checks and Drafts Policy
POLICY FOR INTERCHANGE OF FINANCIAL INSTRUMENTS (CHECKS & DRAFTS) AMONG ASDA MEMEBERS
Policy: The American Stamp Dealers’ Association, Inc. encourages unrestricted exchange of financial instruments among its members as payment for goods or services. A check or draft made by an ASDA member is regarded as a legal instrument and a promise to pay on demand on the date rendered. Failure of such instrument to be honored on demand by the receiver is considered prima facie evidence of bad faith on the part of the maker and is the basis for action by the national office.
Definitions: Terminology as it applies to this policy is defined as follows:
Member: Current member of the ASDA
Financial Instrument: Any Financial document issued for payment of money drawn on a financial institution against the account of the maker.
Maker: Any person making a financial instrument for the purpose of transferring funds in payment of a financial obligation.
Receiver: The recipient of a financial instrument in payment.
Endorser: The person endorsing a financial instrument made by a maker. The endorser assumes liability for the instrument as if he or she is the original maker.
Dishonored Instrument: Any instrument upon which the maker’s bank refuses to make payment due to insufficient funds, uncollected funds, stopped payment or other eventuality within the maker’s control.
First, Second, or Third time instances: Breaches of this policy may occur in multiple issuances of dishonored Financial Instruments. Such occurrences shall be grouped as a single instance if such instruments are dated within a seven-day period.
Specifics:
1. ASDA members are encouraged to accept checks or sight drafts as payment for goods or services when made by another ASDA member in good standing.
2. Checks or drafts should be dated on the date of making. The practice of “Post-dating” of financial instruments is discouraged and it may be illegal is some states or countries. Receivers should be aware of the commercial law in their state or place of residence.
3. A financial instrument (check or draft) rendered by the maker is considered an obligation to pay the receiver in legal currency without restriction when demanded by the designated institution. It is the maker’s responsibility to know and avoid any limiting restrictions concerning these issuances. Issuance of a dishonored instrument is considered prima facie evidence of bad faith on the part of the maker and is contrary to the ASDA By-Laws and Code of Ethics.
4. The practice of using third-party checks to pay obligations is discouraged.
Procedure:
1. Receivers of dishonored financial instruments (checks and drafts) from ASDA members should report such instances to the ASDA National Headquarters and furnish copies of all documents supporting the effected transaction.
2. The ASDA Executive Office will upon receipt of a report and proof of issuance of a dishonored financial instrument by an ASDA member take the following action without delay:
A. Make immediate telephonic contact with the maker-member and secure information on his or her intended corrective action
B. Advise the maker-member that his or her membership will be reviewed by the Board of Directors and he or she will be disciplined pursuant to Article VII of the By-Laws. The maker-member shall be afforded a fair hearing and the right to counsel. The Board may delegate the conduct of the hearing to a committee of members. Thereafter, if the maker-member is found guilty of issuing a dishonored financial instrument, the maker-member shall be fined $25.00 per dishonored instrument payable to Headquarters, ASDA.
C. Maker-members issuing dishonored financial instruments on a second instance within a one-year period of the first instance will be suspended from membership for a period of not less than 30 days and shall be fined $50.00 per instrument occurrence within the 32nd instance.
D. Maker-members issuing a dishonored financial instrument on a third instance within a one-year period of the first instance will be immediately referred to the Board of Directors by counsel with counsel’s recommendation.
E. All communication with maker-member issuing dishonored financial instruments will be documented and retained in the affected member’s file. Telephonic or verbal communications will be supported by memos-for-the-record and copies of these memos furnished to the affected parties.
Revised 4/86