Boston University Annual Review of Banking Law
Uniform Commercial Code, countermanded checks, stop payment on checks, fair dealing
This article evaluates the potential effect of this tort on the bank andits customer where the improper payment is an indisputable binding stop payment order. Part I examines a bank's duty to properly pay checks.Part II describes the bank's reimbursement rights. Part III examines the breach of covenant of good faith tort. Part IV analyzes liability under the Code. Part V argues that banks must promptly recredit customers' accounts when banks improperly pay over binding stop payment orders. The article concludes that upon being notified that it has overlooked a binding stop payment order, a bank must promptly recredit the customer's account, pay interest on the withheld funds, and make good on any NSF checks. A refusal to do so exposes it to tort damages for breach of the convenant of fair dealing.
William Tabac, Countermanded Checks and Fair Dealing Under the Uniform Commercial Code, 10 Boston University Annual Review of Banking Law 51 (1991)