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How to handle stale cheques

Nigerian News Update » Nigerian Newspapers
Punch Newspaper
Banking and commercial practices consider a cheque stale when it was written long ago and the person to whom it was written never cashed it, according to

Will a bank honour a stale cheque I wrote: Unless you write on the cheque that it will not be valid after a certain number of days, banks may honourthecheque. Generally, banks are not required to honourcheques that were written more than six months prior. In some states, a bank will consult with the person who wrote the cheque if it is presented with a cheque older than six months. Certified cheques, which are guaranteed by a financial institution, cannot go stale and will be honoured at any time.

What can I do if my bank honoured a stale check without my permission: Your bank is not responsible for any damage to you if they honour a stale cheque in good faith. If your bank did not act in good faith, an attorney may determine what remedies are available to you.

How do I know if my bank acted in good faith: While there is no definitive definition of good faith, there is some consensus as to what it means. Essentially, a bank acted in good faith if they did not notice the date of the cheque. However, if a bank employee notices the date of the cheque before cashing it, and does not consult you, courts will often determine the bank acted in bad faith.

Is there anything I can do to prevent a stale cheque from being honoured: Most likely a bank employee will not notice the date the cheque was written. Besides writing a “valid until” notice on the cheque, you can contact your bank and request a stop payment if the cheque has not been cashed yet.

What can I do if a bank will not cash a stale cheque: While a bank may no longer accept a cheque dated more than six months ago, the person who wrote the cheque is still liable to you for the debt or obligation that they wrote the chequefor.

Do I need a lawyer: An attorney specialising in banking laws or regulations may advise you of your remedies if you believe a bank honoured a stale cheque in bad faith. If you are unable to cash a stale cheque, a lawyer can help you recover the debt or obligation from the person who owes you the money.

What is a stop payment?

When you give your bank reasonable notice not to honour a cheque you wrote, you have requested a stop payment.

How do I request a stop payment: Most laws allow bank customers to make oral stop payment requests. However, the law may have a statute that requires a stop payment request be made in writing. If there is a writing requirement, and you made the request orally, then the law typically requires that a written request be made within 14 days of the oral request to prevent the stop payment request from expiring. Written requests are generally valid for six months.

May I stop payment on a teller cheque: Generally, a cheque drafted by a teller is drawn from an account held by the bank. Since the cheque is drawn from an account belonging to the bank, as opposed to your personal account, banks are not required to place a stop payment.

What if my bank did not honour my stop payment: If you give your bank reasonable notice to stop payment of a cheque you wrote, your bank must honour your instructions. If, despite giving reasonable notice, your bank pays a cheque, the bank is responsible for any damages you may have suffered.

Can I sue a person who placed a stop payment on a cheque I tried to cash: Usually, if a cheque you cashed was returned because a stop payment was placed on it, you may take legal action. For your lawsuit to be successful, you must show that the person who issued the stop payment acted in bad faith. Usually you can sue for the amount of the cheque plus damages up to three times the amount of the cheque.

What if I am being sued for placing a stop payment: If you are being sued for having ordered a stop payment, you will need to show that when you stopped payment, you did so in good faith. An example of a good faith stop payment would be that you were not satisfied with a service you received.

Do I need a lawyer: Stop payment regulations vary. Some banks have relaxed policies while other banks have rules that closely follow the law. Whether you wrote a cheque and requested a stop payment, or you cashed a cheque that was returned, an experienced attorney specialising in banking laws and regulations can advise you of the applicable laws where you live and advise you of your rights and remedies.
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