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Joint check arrangement does not protect against preference exposure.(CREDIT COLUMN)

Business Credit

| January 01, 2007 | Nathan, Bruce S. | COPYRIGHT 2007 National Association of Credit Management. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

Subcontractors and materials/services suppliers for real estate construction projects frequently use a joint check agreement to increase the likelihood of payment by a financially troubled customer. Under a joint check agreement, the project owner agrees to make payment jointly to the contractor and the subcontractor to insure payment of the subcontractor's invoices. Alternatively, the general contractor agrees to make payment jointly to the subcontractor and materials/services supplier to assure payment of the supplier's invoices.

As part of a joint check arrangement, the contractor or subcontractor, as the case may be, agrees to endorse the checks and deliver ...

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Source: HighBeam Research, Joint check arrangement does not protect against preference...

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