Question

Financial Credit Corporation issued a check payable to Ronson Metal Company. Ronson endorsed the check and deposited the check in its account in Unionville National Bank. Unionville transmitted the check to the drawee bank which returned it because payment had been stopped by Financial Credit Corporation. Unionville Bank and Larch entered into an agreement which stated that the bank “hereby” negotiated the check to Larch. This document was attached to the check, and the papers were delivered to Larch. Is Larch the holder of the check? Discuss fully all of the relevant issues.

Answer 1

As the Financial Credit corporation has stopped the payment of previous cheque, it can not be paid.

Even if they enter into a new contract and attach these to the old cheque but if they haven't informed or entered into a special contract with bank to make the payment of the stopped cheque, the old cheque is useless.

And it is advices to issue a new cheque in these cases.

Hope this meets your purpose.

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