What is the legal or accounting purpose of the phrase "not to exceed $500" (or some other amount) on a cheque?
Who is liable should the cheque exceed the amount? The issuer? Assignee? Bank?
I often see cheques written out for some dollar amount, and then that phrase is printed somewhere else on the cheque (under the address, near the space for comment...). For instance, most recently I saw a computer printed paycheque of $789 and the phrase "not to exceed $800" near the issuer's name and address.
I could imagine that for businesses, booklets of blank cheques are printed and provided to the person with authority to sign. Such a limitation could be posed and imprinted to match the (single-) signing authority of the person in charge of that particular booklet. So if someone in accounting had a signing authority of $500, perhaps they were given a set of cheques limited to $500.
Was that the purpose? (If so, what prevents writing 2 cheques for an invoice over that amount?) And what is the purpose today, when cheques are custom printed one by one anyway, by a system that persumably could limit the amounts based on the authorization of the accounting system's user?