On November 9, Jane Jones writes a check for $500 payable to Ralph Rodgers

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On November 9, Jane Jones writes a check for $500 payable to Ralph Rodgers

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On November 9, Jane Jones writes a check for $500 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.

Answer & Explanation (1)

Explanation
The drawer of the check hold right to seize the payment of check in two ways such as oral communication that is considered valid for 14 days, starting from the date of receiving the communication, and written communication that is considered valid for 6 months. Here, Ralph Rodgers produced the check for payment on December 19 which is more than 14 days of oral instructions given by the drawer of instrument. Thus, the banker has no right to deny the payment of check.

Answer
On November 9, Jane Jones issued a check for $5000 to Ralph Rodgers and stopped the payment of check through telephone call to bank. On December 19, the check was deposited for payment and payment was made by bank.

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