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#1508447 - 02/10/11 10:03 PM Returning a cashier's check - UCC 3-312
AuditorK Offline
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I've read that part of the UCC and have read numerous resources that tell me if the original cashier's check is presented, after the 90 days since issuance and a claim for a lost check has been completed, that the original check can be returned marked as "not properly payable due to enforceable claim made under UCC 3-312" within the midnight deadline.

My question is how do we actually do this? I can't find a Fed return code that applies. A Fed rep has indicated that we just use the "stop payment" return code. Is that accurate??

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#1508530 - 02/11/11 04:12 AM Re: Returning a cashier's check - UCC 3-312 AuditorK
rlcarey Offline
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You need to check your version fo the UCC:

(c) If the obligated bank pays the amount of a check to a claimant under subsection (b)(4) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to (i) refund the payment to the obligated bank if the check is paid, or (ii) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored.
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#1508557 - 02/11/11 01:20 PM Re: Returning a cashier's check - UCC 3-312 AuditorK
Elwood P. Dowd Offline
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You can put the language you quote on the face of the check and use the best reason avaialable to you from the Fed. As you clearly understand, you are not stopping payment, but if that's all there is...

The coding system simply does not reflect every possible return reason.
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#1508558 - 02/11/11 01:23 PM Re: Returning a cashier's check - UCC 3-312 rlcarey
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Wait...so we just have to pay the original check (can't return it unpaid) even after we reissued and paid a replacement check and then we have to try to collect from the claimant? I'm confused.

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#1508566 - 02/11/11 01:32 PM Re: Returning a cashier's check - UCC 3-312 AuditorK
Elwood P. Dowd Offline
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Note the last sentence of the statute. It acknowledges that the check may not be paid.

That paragraph outlines the purchaser's liability. If the item is paid to a holder in due course, he owes the bank. If the item is dishonored, he owes the holder in due course directly.
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#1508567 - 02/11/11 01:33 PM Re: Returning a cashier's check - UCC 3-312 Elwood P. Dowd
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Originally Posted By: Ken_Pegasus
You can put the language you quote on the face of the check and use the best reason avaialable to you from the Fed. As you clearly understand, you are not stopping payment, but if that's all there is...

The coding system simply does not reflect every possible return reason.


In an all electronic check processing environment, I'm not sure how we'd put that description on the face of the check before returning it though. However, it sounds like we just use the best possible return reason and then we explain the UCC 3-312 reason if the BOFD calls saying "what the #@*!?"

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#1508572 - 02/11/11 01:39 PM Re: Returning a cashier's check - UCC 3-312 AuditorK
Elwood P. Dowd Offline
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If the item is $2500 or more you will be giving the BFD direct notice of return, including the reason why. In order to avoid any confusion ( "what the #@*!?" phone calls), you might want to use that same process even if the amount is below the threshold.
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#1508575 - 02/11/11 01:44 PM Re: Returning a cashier's check - UCC 3-312 Elwood P. Dowd
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Good point! Thanks Ken - and rlcarey too! You guys are great!

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#1509376 - 02/11/11 09:09 PM Re: Returning a cashier's check - UCC 3-312 AuditorK
John Burnett Offline
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I sincerely hope you got the return accomplished within your midnight deadline after all this discussion. If not, you could be stuck, and having to figure out how that paragraph (c) that Randy cited works.
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#1509431 - 02/11/11 10:11 PM Re: Returning a cashier's check - UCC 3-312 John Burnett
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John - this was hypothetical and was used in the development of procedures for if/when this situation occurs. Better to plan ahead than scramble at the 11th hour trying to figure out how to handle it. smile

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#1509470 - 02/11/11 11:06 PM Re: Returning a cashier's check - UCC 3-312 AuditorK
John Burnett Offline
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Thank goodness! And that is the way to do things. Anticipate and plan rather than panic and react.
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