Answer:
Answer by John Burnett:
There may be a provision in your state's version of Section 4403 of the UCC that answers your question. The "vanilla" version does not. If there is nothing in your UCC, check with your state banking association to see if there is any rule allowing you to, or preventing you from, refusing an oral order.
If permitted, you should make it clear in your deposit contracts that oral orders will not be accepted.
A caution, however: Unless there is state law that specifically allows a bank to require a written stop order, you risk legal problems if you fail to stop a check on an oral order and your customer sustains damages as a result.
When customers feel a need to stop payment, they usually are NOT interested in the delay involved in handling the process in person or by mail. They need the stop NOW, not three hours from now when they can get to the bank. The negative customer service vibes emitted by this question are strong!
Answer:
Answer by Ken Golliher:
I agree with John. As he notes, the vanilla version of the UCC sets the parameters for oral stop payments and I would add that the heading for that section talks about the customer's right to stop payment. The Florida and Texas legislatures (there may be others) removed the reference to oral stop payments from their state's version of the UCC. Thus, banks in those states are clearly not required to take oral stop payments.
If your state's version incorporates the reference to oral stop payments my opinion would be that you must take them. If you want to stop, it would be necessary for you to amend your account contracts to alter the provisions of the UCC. (That means existing contracts too, not just those that you use beginning some date in the future.)
First published on BankersOnline.com 9/22/03
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