Suppliers going bust and paying by cheque

In message , Graham Murray writes

I think this is a spurious view in the group. =in the normal course of business cheques arent bounced after the normal time limits. The case referred to appears to have involved fraud by all parties to the cheque.

No. Issuing a cheque is outside the scope of the Consumer Credit Act which is what protects credit card purchases.

No. The best you can do is stop the cheque before it is presented for payment at your bank. Once your bank has paid the cheque there is no going back.

Wouldn`t this require the vendors account to have enough money to complete the "reversal" ?

advice

No they haven't.

No.

If you want your money back, the last thing you want to do is nullify the contract, since the contract is the basis on which you could sue for a refund due to the supplier breaching the contract.

None of this helps if the supplier is bust. If worried at the time of ordering that they might *go* bust, you could try insisting that your cheque be paid into a customer account, and not their own, so you would modify the terms of the contract to the effect that the funds remain your property until the goods are received. This is a reasonable clause, mirroring the usual clause that goods remain the property of the supplier until they're paid for. Nevertheless you'd probably be told where to go.

'may' in the sense of 'might be if that cheque was discovered to be a forgery', not in the sense of 'the original payee (if thats the right term) can arbitrarily reverse the cheque' because that isnt possible.

No, I think you mean drawer.

And even in the former sense it isn't really possible unless the payee is in on the scam, or at least this is what JB seems to be saying.

not sure JB has ever answered what happens if X forges a cheque on Y's account and pays it to A, and it isnt noticed by Y for some time, lets say a month or two, but enough for the cheque to have cleared. When it is discovered to be a forgery (this might takea long court case I suppose) , then either the money is 'recalled' from A, and A is out of pocket, or it isnt and B, or B's bank, is. (lets assume at this point that X is long gone)

Given that if you unwittingly buy a stolen car (or anything else) and the theft is later discovered, the car is taken from you and you are left 'high and dry',, I'd be inclined to go with the money being recalled from A as its a parallel situation AFAICS.

"Tumbleweed" wrote

X = forger Y = accountholder A = payee B = ?

I think he has, if not explicitly then by implication. I believe he said that the funds cannot be recalled unless it is shown that A was part of the fraud. The victim of the fraud in such cases would have been the banks, and provided the only naughty party is X, the banks will carry the can and A will keep the money and Y will get it back from the drawee.

Ah, well, this bit in brackets is important. Were X not long gone, then of course he would be made to face the music.

I don't think that is really an equivalent situation. If you buy a stolen car, the real owner gets it back, you lose the money, and the thief, if unidentified, keeps it. A cheque is supposed to be like money, and the whole point of cheques and of keeping one's money in banks, is that it's supposed to be safe both for the payee and for the payer. A forged cheque is like forged money, which if paid in to a bank and not noticed right away, is as good as gold.

In message , Tumbleweed writes

Who's B? Is it really Y on a bad day? What about Z? :-)

Lets talk names. The drawee doesn't bounce the cheque and the payee doesn't have the dosh 'recalled'. The drawee must refund the account holder unless the account holder is estopped from denying liability. (i.e. he owed the dosh to the payee anyway; or even though knowledgeable of the forger forging cheques in the past had done nothing to stop it). (Greenwood V Barclays 1933, Brown V Westminster Bank 1964 ;and Bills of Exchange Act S24) It then becomes a matter between the drawee and the forger. If investigations reveal that the payee is in on this in some way then the bank would have a right of action against the payee as well, but the cheque remains 'paid'.

No, 'money' isnt a physical item, it is an accounting entry. And if somebody nicks fifty nicker from grannie's handbag and puts the fifty nicker in his pocket in which, by chance, there already happened to be another fifty nicker and then was caught by Inspector Knackers Men and despite a superb defence by Messrs Sue Grabbit & Runne, is found guilty of robbery and made to pay the old bag the fifty nicker back, would it matter which of the notes he gave back?

How do you know how old granny's handbag is?

Because James Brown said it was only Papa who has a brand new bag, not Grandma.

LOL/Ooops.

B is Q's long lost relative? Must have been drinking when I wrote that :-)

replace B with Y.

Not a good analogy JB, because in your case the somebody is caught so he can be forced to pay it back, with cheques he isnt, and the only Q is which of the innocents lose out.

I read a story in the 'financial problem pages' of a newspaper, someone paid electronically and put the wrong account no, but it happened to be a real one so wasnt picked up as wrong, and thus got paid into that someone elses account. They couldnt get the money back from the person they paid who were unwilling to return it. At that stage it hadnt gone to court so it may have been that a court would be able to order that.

You also say 'it then becomes a matter between the drawee and the forger' but the forger is long gone, so is the drawee out of pocket then?

In message , Tumbleweed writes

He can be forced to make a payment back to the victim. My point was really to ask you the question, "does it matter if the notes are the actual notes stolen/"

There is only one victim, the grannie.

I cant see the relevance of this comparison at all,. The bank arent at fault. It is a matter between the remitter who by is own action gave some dosh to the wrong person. The resolution would be up to the courts and the recipient may claim that they relied on the bank statement and altered their position, as in Lloyds v Brooks (195) but I have only ever heard of the defence when it was the bank who was the plaintiff.

Perhaps my example would have been better if the thief had not been caught but had bought some goods with it from a shop so that the actual notes lay in the shopkeepers till. The grannie has no rights to that dosh.

Yes. Slingsby & others v District Bank Ltd 1932

Thanks.