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What is my liability after a stop payment on a contractor's check?

What is my liability after a stop payment on a contractor's check?

Q: Can you stop payment on a check to a contractor?

Yes, you can stop payment on a check to a contractor if you have a valid reason, such as a breach of contract or unsatisfactory work. However, stopping payment does not absolve you of your contractual obligations. If the contractor has fulfilled their duties, they may still pursue payment through legal means.

Q: How do you stop payment on a check for services rendered?

To stop payment on a check for services rendered, contact your bank immediately and provide them with the check details. You typically need to do this within a specific time frame after issuing the check. Be prepared to explain your reasons for the stop payment, as this may affect your liability if the check is cashed.

Full question:

I put a stop payment on a check given to a contractor to complete masonry work at my home. The 'check cashing' entity wants me to pay since they cashed the check. However, my bank honored the stop payment which was made 3 business days after I had written the check. What is my liability?

Category: Banking laws
Date: 04/07/2025
State: California

Answer:

When you issue a stop payment order on a check, it prevents your bank from paying the check, but it doesn't eliminate your liability to the person or entity that cashed it. If the check cashing entity cashed the check without knowledge of the stop payment, they may be considered a "holder in due course." This means they took the check in good faith and for value, and they can pursue you for the amount of the check.

Your contract with the contractor governs any claims you may have against them. If the contractor did not fulfill their obligations, you may have a breach of contract claim. A breach occurs when one party fails to meet the terms of the contract, causing the other party to suffer damages.

In general, remedies for breach of contract can include money damages, restitution, rescission, reformation, or specific performance. Money damages compensate for financial losses, while restitution aims to return any money or property given to the defendant. Rescission cancels the contract, and specific performance compels a party to fulfill their contractual duties.

For further details, you may want to review California Civil Code § 3418, which addresses the rights of a drawee (the bank) if a check is paid or accepted by mistake.

This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.

FAQs

How to fight a stop payment check?

To fight a stop payment on a check, you should first gather evidence supporting your reason for stopping the payment. This may include documentation of any disputes with the payee, such as a contractor. You can also communicate with your bank to understand their policies and any potential liability. If the check was cashed despite the stop payment, you may need to consult with a legal professional to explore your options for disputing any claims made against you.

Is it legal to stop payment on a check for services rendered?

Yes, it is generally legal to stop payment on a check for services rendered if you have a legitimate reason, such as the service not being completed as agreed. However, stopping payment does not eliminate your obligation to pay if the services were indeed rendered satisfactorily. If a dispute arises, it may be necessary to resolve it through negotiation or legal channels.

What happens if I cash a check that has a stop payment?

If you cash a check that has a stop payment order, the bank may refuse to honor the check, and you could be held liable for the amount. The check cashing entity may pursue you for the funds, especially if they cashed the check without knowledge of the stop payment. It's important to verify the status of the check before attempting to cash it.