A financial instrument becomes unusable due to the passage of time. Specifically, a written order instructing a bank to pay a specific sum from the drawer’s account to the payee is no longer valid after a certain period. For example, if a person receives a payment document dated six months prior to the present date, the bank may refuse to honor it, rendering the instrument ineffective for its intended purpose of transferring funds.
The expiration of such instruments serves an important purpose in maintaining financial security and preventing fraud. Banks implement these policies to ensure that the transaction reflects the current intent of the account holder and that funds are still available. Historically, limitations on the validity period of financial documents arose from concerns about potential changes in the drawer’s account status, the possibility of fraudulent activities, and the need to reconcile records within a reasonable timeframe.
