sometime ago bayo bought a car from tayo for 20000p and issued him a cheque for the said amount.tayo endorsed the cheque,which was not presented until 4months later.before then bayo had countamanded payment.the bank refused to pay.advice bayo on what he should do to recover the money
1 Answer from Attorneys
As per the prevailing negotiable instrument laws in Nigeria, Tayo is well within his right to endorse the cheque of 20,000 Naira or Pesos in favour of a third party.
You have not explained the reason behind Bayo countermanding the payment :
01) Was the car returned back by Bayo to Tayo due to any valid reasons ?
02) Was the countermanding of the payment valid as per the validity clauses explained by Peter Kehinde Mogaji below :
1.2 Conditions for an Effective Countermand Instruction
For a countermand instruction to be effective, the following conditions must be met:
(a) The stop notice has to be given in writing by the customer. Interim notice given on telephone must be confirmed in due course. In this interim, if the cheque is presented, it can be returned, marked ‘drawer confirmation being awaited’.
(b) The stop notice must be served on the branch where the account is kept. Not in the head office or any other branch of the bank (London Provincial and South Bank Vs Buzzard, 1918).
(c) The notice must be actual and not constructive. This means that it must actually come to the bank before it can become effective (Curtice Vs London City and Midland Bank, 1908).
(d) Only the drawer has the right to stop the payment of a cheque. In the case of a company, the company secretary may give a countermand order if the company signatories are not immediately available. In the case of partners, any active partner can stop a cheque, even if he is not a signatory to the account. A principal can stop a cheque drawn by his agent. It is not appropriate for the payee of a cheque (who is not the drawer) to countermand the payment of the cheque. However in practice, a payee can file a caution notice by reporting any loss of a cheque to the bank, while getting in touch with the drawer. This averts any possible presentation by a wrong person before and effective countermand of payment by the drawer.
(e) Full, sufficient and correct details of the cheque that is being countermanded must be given to the bank. The necessary details are account number, cheque number, payee’s name, date of issue of the cheque, and the amount of the cheque. In Westminster Bank Ltd. Vs Hilton (1926), Hilton issued a cheque number 11783 but the telegram to the bank was to stop a cheque number 11785. When cheque 11783 was presented to the bank, the bank paid it. This payment exhausted the balance on the account and as result of this; a cheque that was subsequent presented to the bank was dishonoured for lack of fund in the account. In an action brought against the bank, it was decided that the bank was not liable since the customer failed to give the correct information about the cheque. In this particular case, it was decide that cheque is the most important identification when giving a countermand instruction. This is the only information that cannot be duplicated. Two or more cheques of the same amount can be issued to the same payee, the same drawer on the same date; but the cheque serial number will be different.
With the above conditions, one can conclude that a bank cannot debit a customer’s account for a validly stopped cheque that was carelessly paid. A negligently paid cheque can be countermanded and the liability would be borne by the bank.
Under the circumstances, you need to confirm whether Bayo had complied with all the above conditions for valid countermanding and ascertain whether the bank is at fault.
Tayo is also at fault for delaying the presenting of the cheque until 4 long months. What is the reason for the delay in the presentation of the cheque to the bank by Tayo ? That also needs to be taken into consideration.
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