Legal Definitions - no funds

Definition: An endorsement marked on a check when there are insufficient funds in the account to cover the check. It means that the person who wrote the check does not have enough money in their account to pay for it.

Example: John writes a check for $500 to pay for his rent, but he only has $200 in his account. When the landlord tries to cash the check, it comes back with a "no funds" endorsement because John did not have enough money in his account to cover the check.

This example illustrates how a "no funds" endorsement works. It is a way for banks to inform the recipient of a check that the person who wrote the check does not have enough money in their account to pay for it.