On December 23, Bank C presents the check to Bank P, the payor bank. On December 28, the payor bank makes payment of the check final. Is Jane Jones’s stop payment order effective against the payor bank? Explain.
On November 9, Jane Jones writes a check for $5,000 payable to Ralph Rodgers in payment for goods to be received later in the month. Before the close of business on November 9, Jane notifies the bank by telephone to stop payment on the check. On December 19, Ralph gives the check to Bill Briggs for value and without notice. On December 20, Bill deposits the check in his account at Bank A. On December 21, Bank A sends the check to its correspondent, Bank B. On December 22, Bank B presents the check through the clearinghouse to Bank C. On December 23, Bank C presents the check to Bank P, the payor bank. On December 28, the payor bank makes payment of the check final. Is Jane Jones’s stop payment order effective against the payor bank? Explain.
To stop the payment against an instrument, the person shall either give a written order or after giving an oral order, the person shall confirm it in writing within 14 days of the oral order. But Individual J did not confirm the oral order of stopping the payment in writing, within 14 days, because of which the bank was not bound to abide by the order of Individual J.
The order of Individual J to stop the payment will not be binding on the bank as Individual J gave an oral order and did not confirm it in writing, within the stipulated time.