Legally Required to Cash Check for Ex-Customer?

You still have a valid contract with the person who wrote the check; i.e. you very explicitly agreed to make payments according to his written order. He has now ordered you to make a payment to this former customer and your refusal would be a breach of that agreement.

If your current customer calls to complain that you refused to cash the check he wrote what, exactly would you tell him?

Your alternatives are limited and are driven in part for your willingness to spawn a "lobby scene." I've known of banks that simply took the entire amount of the check and applied it against the amount owed. (Translated: sue me.) I've known of others that that negotiated an agreement for a payment on the charge off every time they cashed a check.

First published on BankersOnline.com 5/20/13