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Author: JoeEasedale Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 94160  
Subject: Court action against stopped cheque. Date: 25/01/2009 17:07
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I wonder if someone could help firm up an old memory regarding stopped cheques please.

I seem to recall that issuing a cheque acknowledges a debt. Therefore if a cheque is subsequently returned "payment countermanded" ie stopped, redress can be to sue against the bounced cheque alone. I am trying to fit into that what happens if subsequently the value of the work done to earn the cheque in the first place is questioned?
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Author: Clitheroekid Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55985 of 94160
Subject: Re: Court action against stopped cheque. Date: 25/01/2009 17:19
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You are quite right in saying that if you sue on a stopped cheque there is effectively no defence to the action.

This is because you are suing on the promise to pay, and only in very rare circumstances will the court be willing to look at the reason for its being stopped.

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Author: SON1C Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55986 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 10:02
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Could I just clarify this please?

the OP makes a reference to both a stopped and a bounced cheque, both being entirely different situations. A stopped cheque being payment stopped for some reason, whereas a bounced cheque being a case of no available funds to clear the cheque.

My understanding is that there is no defence to a bounced cheque, but there possibly would be to a stopped cheque?

Just checking ;O)

Cheers - Col

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Author: pochisoldi Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55987 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 10:24
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My understanding is that there is no defence to a bounced cheque, but there possibly would be to a stopped cheque?

I think it's the other way round.

We've already established that a cheque is a promise to pay.
If you stop a cheque, then that is a defacto breach of promise - the act of stopping the cheque is deliberate.
A cheque can be bounced for many reasons - and not all of them down to the person who wrote the cheque.

PochiSoldi

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Author: SON1C Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55988 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 10:42
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Hi PS

I think it's the other way round.

I know that it's not because I have sued successfully on a bounced cheque on many occasions. There is no defence in Law to a dishonoured cheque and it is an offence to issue a cheque in the knowledge that there are insufficient funds available to clear it. I have always been reluctant to sue for a stopped cheque.

Whereas, let's say for instance, you issued a cheque to someone for goods which you subsequently found to be totally unacceptable. In my mind, this would be grounds for stopping a cheque.

My reasoning for the foregoing is, let's say there are two ming vases for sale in an antique shop. You give the dealer a cheque for £10k, collect the vase and go home and the cheque is subsequently returned to the dealer, dishonoured (bounced) you have the benefit of the goods but the dealer has not been paid. Wheras I pay the dealer by cheque and when I get home, I find it to be a cheap plaster replica so I stop the cheque.

Whilst I stand to be corrected, I think that I am right on this one

Cheers - Col

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Author: FHPS Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55989 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 11:37
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Hmmm interesting.

So person X owes me some money.
I received a cheque through the post from person Y for the amount owing - I had never previously had any dealings with person Y and they had no obligation to pay me that money.

The cheque bounced ("refer to drawer") So you are basically saying that I can claim against person Y for the money owed even though I never considered them to be liable for the debt ? I assumed I could still only go after person X.

FullHouse

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Author: IsleofWightPete Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55999 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 13:08
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My reasoning for the foregoing is, let's say there are two ming vases for sale in an antique shop. You give the dealer a cheque for £10k, collect the vase and go home and the cheque is subsequently returned to the dealer, dishonoured (bounced) you have the benefit of the goods but the dealer has not been paid. Wheras I pay the dealer by cheque and when I get home, I find it to be a cheap plaster replica so I stop the cheque.

Whilst I stand to be corrected, I think that I am right on this one


In the situation you descibe, I think strictly they could still sue you for breaching the promise to pay, but then you would immediately counter-sue them for failing to supply the product you contracted to buy from them.

In that case, two wrongs probably have made a right in practice, but in pure legal liability, I think they haven't truly cancelled each other out.

I also stand to be corrected!!!!!!!!!!

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Author: JoeEasedale Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56000 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 13:44
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Hi All, Many thanks for the answers to date.

To clarify some of the points/queries raised. Work was done to a property by a builder. At the end of the works, a cheque was issued to the builder by the householder in payment. This cheque was returned unpaid by the drawers bank marked "payment countermanded by order of drawer".
The householder apologised for this and blamed a "bank error" and issued a new cheque for the same amount.
This too was returned unpaid "payment countermanded by order of drawer".
Whereupon the householder was issued with a final demand - pay in 7 days or face court action letter.

After the seven days were up and application made to the small claims court a letter was received claiming "some" poor work - which was news to the builder, and "outrage" at receiving a final demand as the reasons for non payment.

Now if one can sue for the non payment of the cheque without worrying about the invented and not reported till after 2 cheques had not been honoured "poor works", I wonder how the defendants plan to defend PART of the claim against them????????????????????????????????????

Would they lodge a counter claim re the works for instance or would they be precluded from doing that because the court action is being brought on the failure to honour the cheque basis??????????????

Any clarity that one can provide here, very welcome.

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Author: Clitheroekid Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56016 of 94160
Subject: Re: Court action against stopped cheque. Date: 26/01/2009 22:24
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There's no effective defence against either a stopped or a bounced cheque. The basic premise is the same - it's a written promise that has been broken.

The only times you may be able to defend are (1) if there has been zero consideration - i.e the drawer received no value whatsoever and (2) where the cheque was in respect of an illegal transaction, for example as payment for a few grams of coke.

Defence (1) can not be made out just because the goods or services supplied were defective.

Yes, it's quite possible that although there can be no defence the customer will issue a counterclaim. Because he's dealing with it in person he will also enter a defence on the same grounds.

Unfortunately, the problem with any litigation is that your opponent can put in some totally barmy defence and the court will treat it as though it had been hand-crafted by a top QC. In other words, it will nearly always take a positive initiative from you to get it thrown out now rather than plodding through to a hearing.

If a defence / counterclaim is filed it would therefore be worth applying for summary judgment under Part 24 of the Civil Procedure Rules on the basis that as far as the defence is concerned there isn't one; and that as far as the counterclaim's concerned there has never been any previous complaint and that if the customer was sufficiently pleased to attempt to pay you not once but twice they can't have any viable counterclaim.- http://www.justice.gov.uk/civil/procrules_fin/contents/parts...

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Author: JoeEasedale Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56023 of 94160
Subject: Re: Court action against stopped cheque. Date: 27/01/2009 09:22
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Thank you very much indeed Clitheroekid. Your advice is just what I was looking for to put the flesh on the bones of very old law relating to banking knowledge, and allows me to help Son get his money.

Once again -many thanks and if I can ever help with any finance queries then I will be only too happy to oblige.

Regards

JoeEasedale

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