Don't get burned by these costly joint check agreement mistakes
By Scott Wolfe

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Joint check agreements are common in the construction industry, but perhaps more common are mistakes that can lead to significant losses and legal headaches. Here are the three most common mistakes companies make with joint check agreements.


Have you had trouble with joint check agreements?
  • 1. Yes
  • 2. No

1. Not Paying Attention To The Form

Joint check agreements are so common in the industry that many believe there is a standard "joint check agreement" form or some type of legal standard these forms must meet. In fact, the opposite is true. Joint check agreements live in a legal Wild West.

Not a single state has a specific legislative statute outlining the requirements for a joint check agreement. Accordingly, these agreements have a lot of variations. The variations between documents make court cases interpreting them pretty useless, as the case ruling will easily change from form to form.

Further, what the agreement actually says makes a huge difference. Joint check agreements can be written favorably toward one party. You want to make sure that your joint check agreement form meets your expectations.

2. Not Preparing For Fraud

Many construction industry professionals consider joint check agreements to be some type of security blanket. The opposite is true. Joint check agreements are more like a floatation device, used by the parties when someone on the project is sinking or unable to pay.

Since desperate times bring desperate measures, your company should be aware that misrepresentations can happen in joint check agreements. Fraud within these documents is very common.

Fraud comes in two forms:
  • fraudulent signatures on the agreement itself, indicating agreement when actual agreement does not exist
  • fraudulent endorsements on the checks
It's a mistake if you are not prepared for this possibility. To prevent fraudulent signatures, call and confirm agreement signatures. To prevent fraudulent endorsements, require in the agreement that the checks be delivered to your company.

3. Overlooking the 'Joint Check Rule'

It is common to overlook and not even know about the "joint check rule," so please don't beat yourself up. Nevertheless, this rule can be very costly to your company.

The joint check rule is adopted as law in a number of states; and in other states, the courts have not commented, which makes it unclear as to what rule would apply.

Basically, if a supplier receives a joint check and deposits it, the supplier is presumed to have been paid 100 percent for all furnishings up to the date of the deposit. Accordingly, if the joint check agreement is simply a partial payment, cashing the joint check will actually create a presumption that it was a full payment.

This is a big deal. Suppliers need to be very careful when cashing joint checks if the payment is not full and complete.

Scott Wolfe is the CEO of Wolfe Law and founder of, a resource that helps contractors receive payment and manage financial risk. An attorney in six states, Scott is also the author of The Lien and Credit Journal, which zeros in on credit management. You can connect with him via Twitter, LinkedIn and Google+.