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Stop Payment Order for Expense Checks

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Is there a minimum or maximum length of time that a stop payment order for Expense Checks is applicable?

I have seen no time limit differences for this. But recognize that stop payments will be rare. An expense check is very much a cashier's check based on the UCC definition and as noted in the court case mentions below as well as the UCC, banks must be very restrictive on not paying a cashier's check.

"(g) "Cashier's check" means a draft with respect to which the drawer and drawee are the same bank or branches of the same bank."

This means that the ability to actually place a stop payment is very restricted. This court opinion (Associated Carriages, Inc. v. International Bank of Commerce) is from the second link below:

"Nevertheless, a bank will not be liable for expenses and consequential damages for its refusal to pay a cashier’s check if the bank asserts its own defense that it reasonably believes is available against the person attempting to enforce payment of the check. In other words, the bank must be able to assert its own defense against a person who is not a holder in due course.

In addition, the UCC states that a bank will not be liable for expenses and consequential damages when it refuses to pay a cashier’s check if the bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument (Revised UCC § 3-411(3)(c)).

For example, suppose a cashier’s check is made payable to “ABC Supplier, Inc.” The person who has possession of the check presents it for payment over the counter and claims to be an officer of ABC Supplier, Inc. Under these circumstances, as illustrated in the following recently decided case, the bank may refuse to pay the item without exposing itself to liability for expenses and consequential damages."

First published on 08/11/2019

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