Financial matters require extreme vigilance and care for the theft if identity, scams and online hacking are quite a thing nowadays. When a large sum of money is involved, the stakes of losing it are automatically raised.
Monetary matters are usually dealt by bank or financial institute, nonetheless it doesn’t exempt you of your duties to care for the money you are depositing. Lunacy would be in play if you just sit and issue checks and rely entirely on how the banks work. Checks float in banks every day. They fulfill the purpose of drawing money and issuing loans etc. However the payment upon checks has to be eluded entirely for many reasons.
The process to stop payment of checks is needed for the best interests of the stakeholders and financial institutes as well. There is a proper procedure which is to be followed to stop payment letters. Usually the stop payment letter is issued in an event when an individual or a company wish to notify the concerning bank to immediately cease operations like payment on check.
Rules for this Law:
Checking account and that too running is the prerequisite for earning that right to be in practice. Some of the rules for this code of law are
Stop payment order could be issued in verbal and nonverbal form but the duration only varies then. An orally pronounced order would last for a fortnight that is 14 days whereas the written holds significance for 6 months.
It could be renewed in writing to add the additional 6 months to the tenure.
You could hand deliver, call or fax or now email your stop payment.
You are required to keep note and evidence of whatsoever form of payment you put into action. Keep hold of their receipts and all.
Stopping a check payment without a legitimate reason would be punishable under the eyes of law and civil. It has to be in accordance to the bank rules and times.
Reasons to Stop Payment on Check:
There could be a number of reasons for when you decide to deny giving the right to your bank for not issuing the check that you have already written. Some of the concrete reasons are given below:
1. The Check has been stolen:
check itself or the check book in event of being stolen somehow makes a good reason for stopping the check payment. A stop notice form can be issued from your end. You are required to cancel it immediately. A check stop payment letter will act as notice or report to the bank to look after any vile activity on their account. You can cancel by requesting and all your check payments would be halted once and for all until advised otherwise.
2. Breach of Trust:
when the contractor sees the client has breached the trust of contract and gone against the terms and conditions of contract, he is under complete authority to issue a stop payment letter to bank. The good being provided, the product or services promised and other necessities or requirements if not fulfilled than they could easily revoke the right through check payment.
3. Insufficient Funds or Cash:
it is easily and humanly possible that once you have committed and contracted to something you may not be able to fund it completely in the future for whatever the reason is. Under such condition the deliverable in the form of check could be revoked if the business/ company or individual feels like it. It could be that the person who has written a check was expecting cash receivable or deposit from someone but hasn’t received it. This does present another angle of looking at this which is called check floating.
4. Electronic Payment:
since everything even the banks are no more manual, but entirely online there is quite a possibility that payment is done electronically. It could be requested electronically but now you have issued or written a check. To reverse that stop payment letter to bank must be floated immediately to take care of your funds.
5. In Event of Dispute:
if you have some conflict or clash of interest after you have transacted with your client, you can still go for cancelling of the check or stop payment. In event of a dispute you either do a stop payment method or you prefer paying through debit card because you no more trust the merchant or your client to handle monetary matters. Debit card instantly draws money which could then be given away as per your terms and conditions and that too without getting caught in any hassle. It is your money you can do whatever you wish to do with it.
To Sum it Up:
Lastly money matters are quite sensitive. Never be reckless when you are dealing with payments and that too on huge projects. Contracts are made and nullified daily but your money is not easily retrieved that you have once lost. In most cases you are left empty handed with no cash at all. That’s the worst case scenario. So precaution is always better than cure.