CREDITORS BANK HAVE COCKED UP!! Can they puruse debtor?

Wol2

My friend paid a cheque to a creditor in good faith and on time (not an insubstantial amount - it was £5k plus). It would appear that the creditor presented the cheque to their bank, who then lost the cheque before the funds were drawn on my friend's account

The creditor's bank then made an agreement with the creditor to reimburse the creditor for the value of the cheque lost. We know this because this bank have now written to my friend asking them to cancel the original cheque with their own bank and reissue another cheque, but this time made out in favour of the creditor's bank rather than the original creditor. (NB The creditors bank have kindly offered to refund the cancellation charge)


While my friend feels a certain moral obligation to pay this bank..(cos they're a really nice and upstanding person) .....they are nevertheless a little perturbed about this sequence of events. They are under the impression that there is no legally binding agreement or debt owing with this bank and therefore wonder
a) are they (my friend) legally obligated to just write a cheque to a bank they have never had any dealings with on request, when their debt was with the creditor, not the bank..after all it is the creditors bank's error and surely what should have happened is the creditor themselves should have pursued the cancellation and re-issue of the cheque with my friend, not their bank?
b) can the creditors bank really pursue my friend for a debt originally owed to the creditor? and if so what would be their next step. (NB this bank is just starting to up the anti)

My friend did not reply to the banks original letter requesting a cheque in their favour and has just received, from the creditor, a copy of a subsquent letter sent from the creditors bank to the creditor saying they have not received a response from my friend to their first letter. (NB note again, the creditor just sent the letter with a complement slip, no letter of explanation or request to pay or acknowledgement a debt was outstanding...well actually there is no debt outstanding with the creditor as the creditor's bank have paid on behalf of my friend!!)

So the question being asked is not about whether morally they should/shouldn;t pay this bank. The question is, where do they stand legally in view it is the creditors bank's error?

Amy help on this would be appreciated please.

Many thanks
Wol2
xx

CLAPTON

I am not a legal eagle but I would see it thus

your friend owes someone (the creditor) a debt of 5k which through no fault of his has not been paid.

so the debt is still outstanding.

the creditor could assign the debt to his bank if he wanted to

then the bank would legally be owed the debt.

your friend could reasonably ask for documentation from the creditor that the debt has be reassigned to the bank otherwise there would be nothing to prevent the creditor demanding his money from your friend at a later stage.

So I would want a letter form the creditor saying that the debt has been passed to the bank and once paid settles the debt.

LilacPixie

Nationwide lost a cheque I paid in a few weeks back. it actually appears to happen alot.

i'm not a law buff but the way i understand it from my own dealings with nationwide is this.

When a cheque processes thru the bank clearing system the computer assumes that the cheque has successfully cleared the debtors account by a certain date unless told otherwise and the then credit the creditors account. It is only when doing audits that the fact that a cheque has went walk about during the clearing process comes to light.

Nation wide gave me 2 options either ask myself for cheque to be reissued from the debtor or give them the details and they would. I opted for option 2 and received a letter saying they had requested the cheque but it would not affect my bank balance at all.

I would imagine that if they do not get a cheque from the debtor to replace the lost one then they will ultimatly reverse the transaction from the creditors account.

It seems that the bank knows it made an error and is trying to sort it with minimal hassle to its customer the creditor however if the debtor does not play ball the bank would have no option but to reverse the transaction because ultimatly until the cheque clears the debtors account then the creditor has not actually been paid.