Contradictory Terms in Checks: Formalism and Practice Bashar H. Malkawi* I. Introduction The use of cash in transactions carries several drawbacks including insecurity as it can be lost or stolen.1 The purpose of the law of negotiable instruments is to facilitate transactions by using cash substitutes. Cash substitutes incorporate checks, drafts, and promissory notes. However, checks are the most commonly used form as a payment system. In 2006, for example, the total number of check transactions in Jordan was 109319.2 In comparison, checks were used in 42.5 billion transactions in the U.S.3 Therefore, the article will concentrate on the regulatory framework of checks in Jordan and their practical usages as conducted by banks. The Jordanian law on negotiable instruments, or commercial papers, provides certain formalities for checks. 4 In addition, recent court decisions emphasize these formalities and act as gap fillers in cases which the law does not address. The law as well as court decisions form coherent body that governs bank's practice. However, banks in Jordan practice in a manner not in line with the letter of the law and court decisions. The practice by banks creates law-practice discrepancy and de facto pattern different from what the law and court decisions say. Practice of banks can be considered as informal
* Department of Law, Yarmouk University, LL.B. 1999; James E. Rogers College of Law, University of Arizona, LL.M. 2001; Washington College of Law, American University, S.J.D. 2005. 1 See Geva, From Commodity to Currency in Ancient History-on Commerce, Tyranny, and the Modern Law of Money, 25 Osgoode Hall L.J. 115, 130 (1987). 2 See Central Bank of Jordan, Yearly Statistics Series-Check Clearing, available at (last visited November 10, 2009). 3 See Geoffrey R. Gerdes & Jack K. Walton II, The Use of Checks and Other Non-cash Payment Instruments in the United States, 88 Fed. Res. Bull. 360, 360 (2002). 4 The terms "commercial papers" and "negotiable...