Question: Begg & Daigle, Inc., wrote a check for $31,989.80 to Newwall Interior Partitions, Inc. Begg...

Transcribed Image Text:

Question: Begg & Daigle, Inc., wrote a check for $31,989.80 to Newwall Interior Partitions, Inc. Begg then asked Chemical Bank to stop payment on the check. In November, the bank accidentally paid the check. This payment was reflected in Begg's November statement, but Begg did not discover the mistaken payment until the following February. In the meantime, Begg sent a second check to Newwall in payment of the full amount. Begg demanded that the bank recredit its account for the amount of the stopped check. Is the bank liable for paying this check over the stop payment order? Strategy: There are two competing mistakes here-the bank paid a check on which there was a stop payment order; and the customer waited three months to tell the bank about its mistake. In such a case, banks are generally held to a higher standard than consumers. Also, as a general rule, if the customer can prove a loss, the bank is liable on a stop payment order, period. (See the "Result" at the end of this section.)