Legal Question in Business Law in Illinois

Holder in due course sues on stopped payment check

Merchant has a bill submitted to it in person by Con Artist for services rendered. Con Artist has presented similar bills to numerous businesses throughout the area. Merchant writes check and, once informed of the fraud Con Artist was perpetrating, informs local police. Police investigate and prepare fraud report but are unable to locate Con Artist. On advice of police, Merchant stops payment on the check. Con Artist has moved on to a bordering state and has submitted check to a check cashing business there. Thanks to stop payment order, check cashing business gets stiffed. Check cashing business then turns check over to collection agency who contacts Merchant and demands payment. What defenses, if any, does Merchant have?


Asked on 10/06/97, 4:47 pm

1 Answer from Attorneys
Gerald Hershenson Law Office of Gerald M. Hershenson

Collection on A Stopped Check in a Commercial Matter

The merchant would be able to raise the defense of fraud. Any defense raised againstthe original Payee of the check can be raisedas a defense. The collection agency can notsue. The ccmpany that cashed the check is theonly party that could sue

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Answered on 10/06/97, 10:29 pm


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