Harris honored the check. Aliaga now seeks reimbursement from Harris, claiming that the notation served as a stop payment order after the ninety days. Who will prevail? Why?
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Bank customer Aliaga Medical Center opened a checking account with Harris Bank. Aliaga issued a $50,000 check, which bore the notation “void after 90 days.” More than ninety days after the check was issued, Harris honored the check. Aliaga now seeks reimbursement from Harris, claiming that the notation served as a stop payment order after the ninety days. Who will prevail? Why? |
Explanation
The customer-bank relationship gives the right to a customer to stop a payment order given to the bank. The customer should provide the stop order in writing, within 14 days of issuing the check; the stop order is going to be binding for six months on the bank. In this case, Customer A has issued the check with the notation "void after 90 days", which means that the check is not going to remain valid for payment after 90 days and it is binding on Bank H for another three months. After 90 days, Bank H has honored the check, which means that the bank has dishonored the customer's right. The bank should be held liable for the customer's loss and should compensate the customer.
Sample Response
In this case, Customer A should succeed since Customer A has issued the check with the time limitation of 90 days but Bank H has honored the check after 90 days.
