What Happens if You Stop Payment on a Check for a Defective Product
My question involves a consumer law issue in the State of: Florida
If a company ships a piece of machinery to you in Florida from another state and they accept a personal check upon delivery and then you find the machine has a defect, can you stop payment on the check if it hasn't cleared the bank yet? What repercussions would there be?
Re: What Happens if You Stop Payment on a Check for a Defective Product
You could be sued.
And you could lose.
Your remedy for a defective product is the seller's warranty or the manufacturer's warranty.
You stop payment of the check at your peril.
Re: What Happens if You Stop Payment on a Check for a Defective Product
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Pepper58
My question involves a consumer law issue in the State of: Florida
If a company ships a piece of machinery to you in Florida from another state and they accept a personal check upon delivery and then you find the machine has a defect, can you stop payment on the check if it hasn't cleared the bank yet? What repercussions would there be?
Assuming the check was good when you issued it and you are canceling the check based on a good faith belief that the product was defective you won’t have violated any bad check law. However, you may breach the contract by doing that. The seller may, of course sue you if it believes you breached the contract and if it wins it will get a judgment against you for the purchase price, certain court costs, and if your contract allows for it, perhaps the seller’s legal expenses too. But at least in the meantime you’d have your money. You would, of course, be obligated to return the item promptly if you are rejecting it based on being defective.
Re: What Happens if You Stop Payment on a Check for a Defective Product
It doesn't happen often but I have to disagree with you. Stopping payment on a check after receiving merchandize is a crime. There is no good faith reason to stop payment. The issue will become was the check stopped to defraud. And what the purchaser thinks is a defective machine is subjective. The shipper has to have the opportunity to correct. I learned this the hard way a long time ago.
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832.041 Stopping payment with intent to defraud.—
(1) Whoever, with intent to defraud any person shall, in person or by agent, make, draw, utter, deliver, or give any check, draft, or written order for the payment of money upon any bank, person, or corporation and secure from such person goods or services for or on account of such check, draft, or written order, whether such goods or services are valued at the amount of such check, draft, or written order or at a greater or lesser value, and who shall, pursuant to and in furtherance of such intent to defraud, stop payment on such check, draft, or written order, shall be deemed to be guilty of a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, if the value of the goods or services secured for or on account of such check, draft, or written order is $150 or more; and if the value of the goods or services secured for or on account of such check, draft, or written order is less than $150, he or she shall be guilty of a misdemeanor of the second degree, punishable as provided in s. 775.082 or s. 775.083.
(2) This section shall be taken to be cumulative and shall not be construed to repeal any other statute now in effect.
History.—ss. 1, 2, ch. 65-413; s. 980, ch. 71-136; s. 8, ch. 86-161; s. 1302, ch. 97-102.
Re: What Happens if You Stop Payment on a Check for a Defective Product
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budwad
It doesn't happen often but I have to disagree with you. Stopping payment on a check after receiving merchandize is a crime. There is no good faith reason to stop payment. The issue will become was the check stopped to defraud. And what the purchaser thinks is a defective machine is subjective. The shipper has to have the opportunity to correct. I learned this the hard way a long time ago.
Where is the intent to defraud? There is none. The buyer believes it is defective. They are not trying to keep the merchandise, they just want either working merchandise or their money back. Yes, they should work with the seller to remedy it. As long as they are communicating with the seller, I don't see how a prosecutor could whip up intent to defraud.
Re: What Happens if You Stop Payment on a Check for a Defective Product
The intent to defraud is receiving the machinery (now in his possession) without paying for it. It's that simple. If it is determined that it is defective and cannot be corrected he ships it back and is issued a refund. But you don't get to unilaterally decide not to pay for it.
Re: What Happens if You Stop Payment on a Check for a Defective Product
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budwad
It doesn't happen often but I have to disagree with you. Stopping payment on a check after receiving merchandize is a crime. There is no good faith reason to stop payment. The issue will become was the check stopped to defraud. And what the purchaser thinks is a defective machine is subjective. The shipper has to have the opportunity to correct. I learned this the hard way a long time ago.
I disagree with you and, so does the statute you cited. Indeed, you yourself bolded a key part of the statute. Stopping payment with the intent to defraud, i.e. to secure from such person goods or services for or on account of such check, constitutes a crime. But you will note that I said the OP would, if the product was defective, have the obligation to promptly return the defective item to the seller. If the OP does that, he cannot have stopped payment in order to secure the very goods he just returned, right? It is not so unusual to stop payment in this kind of circumstance and return the defective goods. I have had clients do it on occaison (though not in Florida) and it certainly never amounted to a crime. Whether that is the best way to handle it, will, of course, depend on the details of the sale and the contract involved. Where there is a warranty, for example, that warranty may represent the only way to handle a defective item under the contract, exposing the buyer to a potential suit for breach. But not criminal prosecution.
Re: What Happens if You Stop Payment on a Check for a Defective Product
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Taxing Matters
I disagree with you and, so does the statute you cited. Indeed, you yourself bolded a key part of the statute. Stopping payment with the intent to defraud, i.e. to secure from such person goods or services for or on account of such check, constitutes a crime. But you will note that I said the OP would, if the product was defective, have the obligation to promptly return the defective item to the seller. If the OP does that, he cannot have stopped payment in order to secure the very goods he just returned, right? It is not so unusual to stop payment in this kind of circumstance and return the defective goods. I have had clients do it on occaison (though not in Florida) and it certainly never amounted to a crime. Whether that is the best way to handle it, will, of course, depend on the details of the sale and the contract involved. Where there is a warranty, for example, that warranty may represent the only way to handle a defective item under the contract, exposing the buyer to a potential suit for breach. But not criminal prosecution.
Your point is very valid. However, I was the CFO for a small local corporation for many years, and what happened, with more frequency than one would imagine, is that customers who were COD due to a poor payment history, would sometimes order products, write a check when the products were delivered, and then put a stop payment on the check claiming that the products were defective, just to delay paying for them. They would then stretching out the "dispute" for a couple of months and then finally pay up.
Our company got to the point with those customers where we would not even accept a check anymore. They had to pay COD cash only. Had we chosen to pursue them more harshly, we could have done so.
Re: What Happens if You Stop Payment on a Check for a Defective Product
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llworking
Your point is very valid. However, I was the CFO for a small local corporation for many years, and what happened, with more frequency than one would imagine, is that customers who were COD due to a poor payment history, would sometimes order products, write a check when the products were delivered, and then put a stop payment on the check claiming that the products were defective, just to delay paying for them. They would then stretching out the "dispute" for a couple of months and then finally pay up.
But in those cases, the customer kept the item. There was no rejection of the goods and prompt return to the seller. So in the situation you describe, sure, a case might be made that the buyer violated the Florida criminal statute because they intended to keep the item apparently without paying for it (although you say most of those customers did ultimately pay up). But I am saying that prompt return of the item — not keeping it — takes the buyer out of that criminal statute because the very act of promptly returning it shows there is no intent to keep the item. Bear in mind that the Uniform Commercial Code (UCC) itself says that where a buyer rejects goods as defective/nonconforming, the buyer has an obligation to keep the goods safe and make them available to the seller to remove. UCC § 2-602. While returning them to the seller is strictly not required by the UCC, it would certainly meet the requirement of the statute. So if the buyer rejects the goods but keeps them to use as his own, that would violate both the UCC and the Florida statute regarding criminal fraud. But if the buyer promptly returns the goods (or holds them and makes them available to the seller to pick up) he or she meets the UCC and in that instance the Florida criminal statute is not violated as there is no intent to keep the goods and the buyer is following the UCC. This is why prompt return is important and why I made a point to say the buyer would need to take that step.
Re: What Happens if You Stop Payment on a Check for a Defective Product
Would your analysis be the same if the machinery was perhaps used and sold as-is (no warranty even of machinability ) and the price included service such as fright and delivery?