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Old 02-05-2013, 03:47 PM   #1
mazBut
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Default Invalid cheque... Was the bank wrong in paying this cheque?

My bank payed a payees account cheque to the payee whereupon i had written a two line note on its forefront that that cheque needed my prior permission before payment after performance of a certain contractual between me and the payee or holder of cheque. Despite this noting on the face of cheque the name, amount, date, signatures were mine. Fyi I had issued that cheque for an approx amount as indemnity , receipt only to make it non negotiable until the payee completed the contractual conditions and in case i died he could claim the amount frm my successors by showing them the cheque n fulfilment of contractual obligation on him accordingly. Moreove, since the payee needed time to complete the deal he asked for a '''claused'' cheque as some proof and it was agreed that after completing contractual terms the payee would return me that cheque n that i would issue him a new cheque after adjustment of account which could be more or less than the approx amt fr which the impugned cheque was preliminary issued. Now the question is 'Was the bank wrong in paying this cheque n what remedy do i have to reclaim it from my bank?
The payee has been overpaid n i suspect him to collude with someone in bank who passed this suspicious,invalid cheque with clear noting on its forehead.
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Old 02-05-2013, 04:11 PM   #2
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

I wish to inform you that cheque is unconditional order to pay thus clearing a conditional cheque can be argued by you as negligence of bank. In this regard you can file a complaint with FTC for negligence in service. You can also file a lawsuit to recover your loss against bank and other person.

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Old 02-05-2013, 04:24 PM   #3
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

You need to consult your contract with the bank. It is likely they disaffirm responsibility for additional agreements beyond basic endorsement protections.
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Old 02-05-2013, 05:40 PM   #4
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Thanks AAF, your comments are sound/logical. Do you advise me to complain to the central or the state bank as it is called in Pakistan??

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I wish to inform you that cheque is unconditional order to pay thus clearing a conditional cheque can be argued by you as negligence of bank. In this regard you can file a complaint with FTC for negligence in service. You can also file a lawsuit to recover your loss against bank and other person.

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Old 02-05-2013, 05:45 PM   #5
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thanks, i have no special rule applies to my contract with my bank with whom i hold a savings account. Hence general banking rules apply. I am sure my bank or any bank here will not pay against such a cheque.

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You need to consult your contract with the bank. It is likely they disaffirm responsibility for additional agreements beyond basic endorsement protections.
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Old 02-05-2013, 06:20 PM   #6
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

You are confusing a savings account with a checking account. All banks have rules specific to their services.
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Old 02-05-2013, 06:41 PM   #7
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

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Originally Posted by mazBut View Post
My bank payed a payees account cheque to the payee whereupon i had written a two line note on its forefront that that cheque needed my prior permission before payment after performance of a certain contractual between me and the payee or holder of cheque. Despite this noting on the face of cheque the name, amount, date, signatures were mine. Fyi I had issued that cheque for an approx amount as indemnity , receipt only to make it non negotiable until the payee completed the contractual conditions and in case i died he could claim the amount frm my successors by showing them the cheque n fulfilment of contractual obligation on him accordingly. Moreove, since the payee needed time to complete the deal he asked for a '''claused'' cheque as some proof and it was agreed that after completing contractual terms the payee would return me that cheque n that i would issue him a new cheque after adjustment of account which could be more or less than the approx amt fr which the impugned cheque was preliminary issued. Now the question is 'Was the bank wrong in paying this cheque n what remedy do i have to reclaim it from my bank?
The payee has been overpaid n i suspect him to collude with someone in bank who passed this suspicious,invalid cheque with clear noting on its forehead.
I'm confused here. How is it that the bank is supposed to know what conditions must be satisfied by the payee prior to being able to cash the check? And how would the bank know whether or not these conditions have been met prior to the payee presenting the check to be cashed/negotiated through the bank?

The bank is not a party to whatever contract existed between you and your payee. All they know is that a check was presented to them to be cashed. In that respect, the bank cannot be held liable for your payee not satisfying whatever conditions existed for them to receive the benefit of the funds from that check as written.

Any issue you have with an overpayment are strictly between YOU and the person to whom the check was issued. The bank has nothing to do with it.
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Old 02-06-2013, 02:11 AM   #8
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Thanks but wasn't the bank supposed to abide by the banking laws universally in vogue which renders invalid any cheque with substantial additional remarks/notings on its forehead? Here, scibbling on even a currecy note makes it invalid. Similarly, a cheque too is a negotiable instrument n any suspicious noting on it should make it invalid or at least suspicious for bank to pay without referring to the payer/drawer,moreso when the account is of a savings nature.


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I'm confused here. How is it that the bank is supposed to know what conditions must be satisfied by the payee prior to being able to cash the check? And how would the bank know whether or not these conditions have been met prior to the payee presenting the check to be cashed/negotiated through the bank?

The bank is not a party to whatever contract existed between you and your payee. All they know is that a check was presented to them to be cashed. In that respect, the bank cannot be held liable for your payee not satisfying whatever conditions existed for them to receive the benefit of the funds from that check as written.

Any issue you have with an overpayment are strictly between YOU and the person to whom the check was issued. The bank has nothing to do with it.
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Old 02-06-2013, 02:51 AM   #9
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

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Thanks but wasn't the bank supposed to abide by the banking laws universally in vogue which renders invalid any cheque with substantial additional remarks/notings on its forehead? Here, scibbling on even a currecy note makes it invalid. Similarly, a cheque too is a negotiable instrument n any suspicious noting on it should make it invalid or at least suspicious for bank to pay without referring to the payer/drawer,moreso when the account is of a savings nature.
If the payee and amount of the check were clearly identifiable, then the extraneous writing is of no consequence. The pertinent information was there, and the check was paid based upon it.
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Old 02-06-2013, 03:27 AM   #10
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Default Re: Invalid cheque... Was the bank wrong in paying this cheque?

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If the payee and amount of the check were clearly identifiable, then the extraneous writing is of no consequence. The pertinent information was there, and the check was paid based upon it.


I am not sure about it because the banks here refused other cheques so marked. The banks are strictly bound to follow the banking laws which forbids them to pay suspicious cheques.
Will appreciate if you could possibly post a case law/citation .bank rule to substantiate your view?
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