O'Shea issues a check drawn on Prime Bank to Quality Equipment Supply to pay for a backhoe. Later,O'Shea discovers a defect in the backhoe and orders the bank to stop payment on the check. O'Shea does not renew the order,and the bank clears the check eight months later. The bank
A)must recredit O'Shea's account.
B)must obtain funds from Quality to cover the amount of the check.
C)must substitute acceptable goods.
D)need not recredit O'Shea's account.

Question

Quizplus · Accepted Answer

Once a check has been cleared by the bank and the funds have been transferred, the bank is not responsible for stopping payment or recrediting the payer's account. In this case, O'Shea did not renew the stop payment order, therefore the bank cleared the check and transferred the funds to Quality. The responsibility to resolve the issue with the defect in the backhoe lies between O'Shea and Quality, and the bank is not involved.

O'Shea Issues a Check Drawn on Prime Bank to Quality