Mountain Law: Civil liability under Colorado law for writing bad checks (column) |

Mountain Law: Civil liability under Colorado law for writing bad checks (column)

Even in our increasingly digital world, many people still pay for goods and services with good old-fashioned checks. And that means that we still have bad checks that are not honored when the recipient—known as the “payee”—presents them to the bank for payment. What are the civil remedies in this circumstance under Colorado law?

It should come as no surprise that the person who wrote the check—known as the “maker”—remains liable for the face amount of the check. The maker is also liable for a bad check fee not to exceed $20 if it is posted at a business or provided in a contract such as a lease.

If the maker does not pay the amount owed (including the face amount of the check and the bad check fee) within fifteen days after notice from the payee, then the maker is additionally liable to the payee for the greater of three times the face amount of the check or one hundred dollars. If the bad check happened to be the payee’s paycheck, then the maker is additionally liable for damages caused by the nonpayment (such as late fees incurred on other debts that could not be paid without the paycheck). The court may award the prevailing party in any legal proceeding about an alleged bad check costs and attorney fees.

The payee may send the maker the bad check notice discussed above by certified mail addressed to the maker’s most recent known address. If the notice is mailed and not returned as undeliverable by the postal service, then the notice is effective on the date of mailing for purpose of counting the fifteen days for payment. The notice is not considered “undeliverable” if the maker refuses or fails to claim the certified letter. The contents of the notice are dictated by statute. Generally, they must include information about the check, the amount owed, and certain advisements.

The maker’s liability for statutory damages is subject to certain potential defenses. Primarily, the maker is not liable for stopping payment on a check by reason of a dispute about the goods or services relating to the check. Other potential defenses include the following: (1) the account contained sufficient funds to pay the check and all other outstanding checks at the time the check was written; (2) the check was not honored because a paycheck deposited in the account was not honored by its maker; (3) without knowledge of the maker, funds sufficient to cover the check were garnished before the check was written; (4) the maker was a minor or legally incompetent at the time the check was written; (5) the check was written under fraud or duress; and (6) the transaction lacked legal consideration (e.g. nothing was given in exchange for the check) or was illegal.

Application of these defenses depends on the facts and circumstances of the transaction. In one Colorado case, the defendant gave the plaintiff a check for $24,600 to evidence that he had lost a “friendly” golf wager, but advised the plaintiff that he would eventually pay the debt in another manner. The plaintiff deposited the check anyway and then sued the defendant for statutory damages when it bounced. The court eventually decided that the golf wager had not been illegal gambling (as claimed by the defendant), but it nonetheless refused to award statutory damages because the plaintiff understood that the defendant never meant to honor the check.

Noah Klug is owner of The Klug Law Firm, LLC, in Summit County. He may be reached at 970-468-4953 or

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