Fact Pattern 17-1
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 17-1.Capital Bank
A)is liable to Fix-It for the amount of the check.
B)must stop payment if Capital has a reasonable time to act.
C)need not stop payment unless Echo had a valid reason to act.
D)need not follow Echo's order unless the check was certified.

Question

Fact Pattern 17-1 
Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a check drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order.
-Refer to Fact Pattern 17-1.Capital Bank
A)is liable to Fix-It for the amount of the check.
B)must stop payment if Capital has a reasonable time to act.
C)need not stop payment unless Echo had a valid reason to act.
D)need not follow Echo's order unless the check was certified.

Quizplus · Accepted Answer

According to the Uniform Commercial Code (UCC) § 4-403, the bank must stop payment on a check if it is requested within a reasonable time and the order is given in a way that would allow the bank to act on it before the payment is made. Since Echo gave a valid order and Capital had a reasonable time to act, they must stop payment on the check. However, Capital is not automatically liable to Fix-It for the amount of the check, and Echo does not need a valid reason to act. The certification of the check is also not relevant in this situation.