Banking - Stopping cheques
Updated 24 July 2019
Words you may need to know
Cheque – this is a bank document. The bank may give you a cheque book to use with your account. When you write a cheque you are asking the bank to pay money out of your account to somebody else.
Draft – this is a special kind of cheque which is prepared by the bank
Illegal – against the law
Bounce a cheque – this is something the bank does. It refuses to pay out on a cheque as there is not enough money in the account or you have gone overdrawn.
Overdraft – sometimes the bank will agree to let you spend more money than you have in your account up to a limit you have agreed with the bank. This extra amount of money is called an ‘overdraft’ but if you use this money it is a debt you owe to the bank.
Overdrawn – you have used up all your own money in your bank account and you are using the bank’s money in your overdraft..
Goods and services – goods are ‘property’ or items such as a TV or a car, food or clothes. Services are provided to you ,such as hairdressing, window cleaning etc.
Indefinitely – without any limit on time
Expired – a card has expired when it is out of date (that is, the date is after the expiry date on the card) .
Limited Company – this is a business that has set itself up as what is called a ‘limited liability company’. It has the letters ‘Ltd.’ or word ‘limited’ after the company name.
You can ask the bank to stop a cheque you have written. If this happens it means that the person or company whose name appeared on the cheque will not get paid. However, you cannot stop a draft.
While it is not illegal to stop a cheque, it is a criminal offence to hand over a cheque if you intend to stop it later, although this can be difficult to prove. It is also illegal to give a cheque knowing that the bank will not pay the amount, that is, it will bounce the cheque.
If you pay for goods or services by cheque and then stop the cheque, court action can be taken against you for the money owing. Court action can also be taken even if you do not owe any money, for example, if you return the goods after you have bought something and then stopped the cheque.
You might wish to stop cheques from being paid from your account if, for example:-
- you lose a cheque or cheque book
- your cheque card is stolen
- you wish to stop a payment, for example, to a shop
To stop a cheque, you should telephone the bank straight away. You will need to give proof of who you are and details of the cheque. You then need to confirm what you have done in writing as soon as possible.
A charge will usually be made to stop a cheque. A stop on a cheque lasts indefinitely unless a time is agreed such as when you want to put off payment until you have enough money in your account.
If a bank pays out after a cheque has been stopped, the bank must repay the money to the account holder. The bank cannot say it is not responsible for this. To get back its loss, the bank can recover the money from the person who has been paid. They are called the ‘payee’ but usually this is not worthwhile unless it is for a large sum of money.
If the payee did not realise that the bank had made a mistake and then used the money in a way they would normally do (acted in good faith), the money may not be recovered by the bank. This can be a difficult area of the law and the payee may need to take more advice from a lawyer.