Bank bounces cheque on a technicality - payee not filled in.

Not sure whether I have this in the right section but here goes I am banking in a personal capacity with the same Bank since the early 80's, no current borrowings, have small deposits with them.

I am doing business with the same garage since the mid 90's and recently changed one of my family cars which I tend to do frequently as there are a few drivers in the house and extended family, this time the cheque was for €18000.

I did not enter any payee, instead asked my dealer to either put the name of whichever company ( he has a few ) he needed to as payee, the rest of the cheque was in order.

I received a call from the Bank when the cheque was presented in the normal way to enquire whether the cheque was in order to pay without a payee, I explained what must have happened and was told that was fine and not a problem.

The Bank subsequently and on the same day bounced my cheque despite the Bank Official telling me it would be paid, the Official is very apologetic and blaming the system.

Where does that leave me, I got a call from the motor dealer at 10 a.m. telling me that cheque was returned and should he represent it, Ok, he submitted it without entering the payee details and yes I should not have given him an open cheque BUT the Bank Official called me about that matter, had confirmation that the cheque should be paid from me and that was the bottom line. First time a cheque was ever bounced on me.

I propose to follow up with a written complaint but should I leave it at that, will this dealer take a cheque from me again..who knows, I bet they hear lots of lame excuses but on this occasion my Bank failed to follow my instructions after they were sought from me by them and have left me red faced, it is beyond embarrassing.

The bank are within their rights to bounce a cheque with no payee on it.

The cheque should not have been presented with no payee marked. So it is really your problem and whoever paid it in.

Actually, I think you should not be embarrassed. The dealer was to blame for not filling in the payee details.

If he refuses to accept a cheque from you in the future, because of what he did, take your business elsewhere.

Time - I think you miss the point entirely, The Bank called me and asked if it was in order to pay, I confirmed it was, they returned it afterwards.

I understand that.

I think that in law they cannot pay a cheque made out to nobody. Maybe the person you spoke to did not know this?

S6 of the Bills of Exchange Act 1882:
6 Address to drawee..

(1)The drawee must be named or otherwise indicated in a bill with reasonable certainty..

I would have thought you could argue that the Garage stamp on the back of the cheque would be a proxy - but what would your cause of action be?

They have not bounced it by stating lack of funds - there is no reputational matter- the Bank did not follow what you agreed but I dont see what your damage is apart from having to write the drawee yourself .. and represent.

I am even surprised they even saw it.

The bank is the drawee. The issue is that the payee is not clearly identified.

That said, the failure to indicate clearly who the payee is is also, to my mind, a fatal flaw - albeit one that the garage could have remedied.

The bank were still within their rights to refuse it.

@PadraigB rush of blood to the head - I meant s7 which refers to Payee:

7 Certainty required as to payee..

(1)Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty. .


(3)Where the payee is a fictitious or non-existing person the bill may be treated as payable to bearer.


HOWEVER - section 7(3) refers to 'bearer' but that this may be treated as payable to bearer and that is an option and is not obligatory..

I dont see a case succeeding.

Ok but in this case an Official with long service called me to confirm should it be paid in the absence of a payee.

That call was prompted by a request further up the line to seek clarification from the customer BEFORE a decision was made to return the cheque, it is at that point I think that everything changes, the official confirmed that the cheque would be paid to me after we spoke, I am speculating now but it could be that the official did not circle back and do whatever it is they should have done to assure payment.

You are annoyed that you were given incorrect advice over the phone, and you are right to be annoyed and if I were you I would write a letter of complaint.

However, in your OP you say
"I propose to follow up with a written complaint but should I leave it at that"

I dont know what other route you have other than a complaint and a follow up to the Financial Ombudsman, if you are dissatisfied.

You have not suffered an financial or actual impact. All that happened is that your car dealer suffered a delay in getting his money, which was due to his mistake in ignoring the most basic rule of security with a cheque. He is lucky that a delay is all that happened.

You claim to have suffered reputational damage, but its not a strong story when the dealer is aware that you had the funds and that the mistake was his.

Huskerdu - I agree that is all logical, as in all things a day has now passed and right now I'm not interested in putting time into formulating a written complaint.

I do however think that the issue is important, the customer ( me! ) was assured the item would be paid and it was not. Perhaps the course of time and history has in some way devalued what a bounced cheque means, well not in my world, in my world a cheque returned whilst not for lack of funds in this case is something that requires consideration before the Bank pulls that trigger, the history of the customers account, time banking with them, credit worthiness etc etc should all be weighed up... I also believe the customer should be able to rely on what a senior employee of a Bank says ....well in this context anyway.

The Official is to get back to me tomorrow so we'll see what they say.

The bank was right to dishonour the cheque: it was not properly drawn.

The official who told you that it would be honoured was wrong. That is the only basis on which you can make a complaint.

While the most usual reason why cheques are dishonoured is "insufficient funds", it is not the only one. I suspect that "defect in drafing" is well up the list. Be thankful it was not "drawer deceased" or "drawer declared insane".

This is a nonsense story. OP was completely incorrect to give a cheque with no payee on it to a third party. This is a complete no no.

The garage owner has done nothing wrong. OP should not have expected or asked him to fill out the payee.

The bank official who tried to help the OP because a long standing customer was wrong to think that the cheque could still go through, but he did it to help the customer and now the customer wants to complain?

OP should accept that he made a mistake, he's at no loss other than a bounched cheque, a bounced cheque is proper order, that's what banks do, bounce cheques that are not filled out correct, to the benefit of all customers and to prevent fraud.

And the poor bank official (and I'm no fan of bankers) is in hot water with his management no doubt for trying to bypass the system.

Bronte said:

And the poor bank official (and I'm no fan of bankers) is in hot water with his management no doubt for trying to bypass the system.

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Probably an understatement! I expect legal/compliance/risk management or whatever it is called at that bank are on the war path, I'm sure it seems very iffy from their point of view:

- Customer gives incomplete cheque to vendor
- Vendor tries cash incomplete cheque
- bank official tries to assist in cashing incomplete by overriding the system

Next step would be:
- Customer asks for the return of his 18K as bank cashed incomplete cheque

You can well imagine they would be thinking of some kind collusion and fraud!

Just to close this piece out and clarify further.

There was no bypass, their system is to provide the local branch with a listing of cheques to be returned for all reasons, lack of funds, technicalities and so on, the local branch reacts to this e-mail listing as appropriate.

What is established practice in this situation was to call the customer and establish the bona fides of the cheque, once established and with the customers authority the cheque gets paid. The cover note received from the centre states that no further action is required if this item is to be paid alongside my cheque, the local Official who I know for years took that at face value, queried the cheque, established it could be paid, made a note of the confirmation and call etc and carried on with their days work....the centre hopped the cheque, no collusion or conspiracy theories..

A internal comms breakdown, no more investigation internally or with me, the issue is closed, the fact is nobody at the Bank gives a toss either way and I've too much to be getting on with.

There is a big difference in making a cheque out to a Ltd. Company or making a cheque out to an individual.
Supposing the garage owner had made the cheque out to himself, gone bankrupt or to his company that immediately went in to liquidation. I assume you bought the car from a company rather than from an individual?
How would you have dealt with the bank if they had paid the cheque without any payeee on it if either of the above scenarios happened.
If your car developed a problem and you wanted to sue. Who would you go after?

SoylentGreen said:

There is a big difference in making a cheque out to a Ltd. Company or making a cheque out to an individual.
Supposing the garage owner had made the cheque out to himself, gone bankrupt or to his company that immediately went in to liquidation. I assume you bought the car from a company rather than from an individual?
How would you have dealt with the bank if they had paid the cheque without any payeee on it if either of the above scenarios happened.
If your car developed a problem and you wanted to sue. Who would you go after?

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As outlined in my first post I am doing business with these people since the mid 90's, there is an established trust, I also have an awareness of their financial stability, you miss the point not that it matters now but the Bank verifed with me that the cheque should be paid, I told them I wanted it paid so the issue of crying wolf afterwards due to absence of payee was not the Banks concern but my own.

Thank your lucky stars that the cheque didn't fall into wrong hands or get lost and cashed by someone else. Learn the lesson - never give someone a signed cheque with no payee. And for 18 grand. Enough said.

Have to agree with Gerard123.
You should move on and put it down to experience.