Stop Payment Before it is Too Late!

A stop payment order is an order from a drawer of a check given to a bank to stop payment on that check. A stop payment order will annul that check, preventing the holder from cashing it or otherwise presenting it for payment. Issuing a stop payment order is not an instantaneous or easy process, but it the best way for a drawer to prevent a check from being drawn on his or her account.

The primary reason that a drawer might try to stop payment on a given negotiable instrument is if some party involved with the instrument lost it and the instrument's current whereabouts are unknown. For example, if the instrument in question was a check which had been given a blank endorsement by the payee and then lost by that payee on his or her way to cash it, then upon being informed, the drawer would likely issue a stop payment order on the check in order to prevent an unintended party from cashing the check.

Unfortunately, in the above circumstance, it's likely that the stop payment order would be ineffective. To stop payment on a check, the drawer must provide the bank with information about the check in question and the account from which the check was drawn. Furthermore, such information must be provided with enough time to the bank for it to take the necessary action.

If the bank is given a stop payment order, for example, one hour before the check is submitted for payment, then this might not constitute a situation in which the stop payment order was issued to the bank with enough time for the bank to take action. As such, the bank would not be held responsible if the check was cashed, even though the stop payment order had been submitted.

The only people who can issue a stop payment order for a given account are those who can draw on that account. There might be multiple individuals attached to a single account, but in such a case only one individual is necessary to issue a stop payment order.

When attempting to stop payment, a customer might call in to the bank first to stop payment immediately and then send in written confirmation at a later date. The information necessary to stop payment can be submitted orally, but any such stop payment order would expire after 14 days if it was not confirmed in writing during that period. A written stop payment order, on the other hand, would last for six months after which point the check would actually become payable again. The stop payment order can be renewed, however, in order to ensure that the check will not be cashed.

Additionally, another statute of the Uniform Commercial Code states that banks do not have to pay checks older than six months unless those checks are certified. This means that after two six-month cycles, a stolen or lost check will likely be defunct, although to be absolutely certain the drawer would have to continue issuing stop payment orders.

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