What is a Blank Check?

There are several meanings to the term blank check. In the literal sense, a blank check can refer to any unwritten and unsigned check attached to a specific bank account. Until you sign the check and write it out for an amount, it’s only a potential document for paying money out of your account to someone else. In some cases, people will sign a blank check when they don’t know the amount they need to pay or repay to someone. If you send a friend to the store to pick up a few things for you, you might give them a signed blank check so that the friend can write in the amount, and hopefully no more, as a means of reimbursement.

Of course, if you hand a signed blank check to someone, there is the possibility they could write in any amount they wish. Provided funds existed in your account to cover that amount, you could end up with an empty bank account. This has led to the more symbolic meaning of blank check, or carte blanche, which is often used in politics.

When someone is given carte blanche, they are essentially being given permission to act in whatever way seems fit and appropriate, often in service to a government or government official. A person with carte blanche may not be bound by the same laws that apply to most other people, or they may be empowered to act or approve agreements with other governments, without going through official channels. Carte blanche might also be given to a person managing a business, so that the person thinks outside the box and does whatever he/she feels is necessary to make the business better.

In finance and investing, some businesses are referred to as blank check businesses. These are companies, which are usually new or in the developmental stages of opening, and they may not have a specific business plan. The success of the company may depend upon acquiring another company, upon which a business plan will be based. Alternately, they may be started in the hopes that another company will scoop them up and make them profitable. Such corporations run on a day-to-day basis and usually issue penny stock, which is sold at an inexpensive amount as an investment, since if the business becomes profitable, the stock can be sold at a high payout.